Luis Rubio

 John Lennon once said about the early years of rock and roll, “Before Elvis there was nothing”. The government of President López Obrador bodes the same. For a year and a half, it embraced an enormous latitude, unknown since the seventies, for developing its programs and advancing its priorities. But, as for all presidents worldwide, something unexpected called this to a halt, changing everything thenceforth. What was, was; now begins the reality.

Perhaps the greatest change that the coronavirus brought with it, of necessity, was the strengthening of the society vis-à-vis the government, something unavoidably exacerbated due to the clumsy manner in which the government failed in its responsibility to protect the population. The consequences of this change will be discerned in the months and years to come, the greatest of these possibly being, in the last analysis, that Mexican society would free itself from an oppressive political system that has thwarted the rise of a true democracy. Time will tell.

The action of the society was not concerted nor organized and, because the isolation, the nodal characteristic of the circumstances, each company, organization, union, family or person made their own decisions. A new era that will doubtlessly change the future came into being.

The preeminent immediate challenge will be to deal with the sudden unemployment of the majority of Mexicans, the product of the disappearance of jobs and diverse earnings, constitutes the greatest intellectual and practical challenge for the government and for society because whatever emerges from these will determine the nature of the recovery that takes place afterwards. That is why the various initiatives coming out of society are so relevant -those having to do with financing the stalled economy as well as those in the congress that succeeded in stopping yet another attempt at authoritarian control-, though only time will tell whether they were sufficient. Many governments the world over anticipated these impacts, for which they developed assorted responses whose results will be seen by experience, but in this regard the contrast with Mexico’s government is plain: the government not only denied the existence of a crisis, but its actions intensified, deepened and prolonged it, without doing anything to mitigate those effects. Pathetic for a government which claims to be concerned for the poor.

The sum of a governmental strategy that was erroneous from the beginning of the administration –oriented toward imposing decisions on national and international economic actors- and the lack of foresight and capacity of response in the face of the crisis, will inexorably translate into an acute economic contraction and, much worse, an incapacity for achieving an accelerated recovery. To the errors in vision of the current administration, we must append the intrinsic weaknesses of the political system, whose historical feature is impunity. In a context such as this, a rapid recovery is inconceivable.

A scenario typified by severe recession, unemployment, political crisis and a total absence of credibility and trust in the government will result in political consequences that could feasibly be benign –the consolidation of a democratic system-, but that could also lead in the opposite direction: the fortifying of the most hard-core and radical elements of the Morena party; the dying out of any vestige of order; the growth of criminality, acting without distinction or consideration; the radicalization of the government in economic as well as in political and judicial matters; social and political decomposition that generates massive emigration.  There is no limit to the possibilities of deterioration.

What can be done in this respect? The first question that all of us citizens should ask ourselves is whether the President is going to adapt to the new reality or whether he will continue attempting to adapt the reality to his preconceived blueprints. The cost of that way of conducting himself will be measured in the number of lives lost, jobs that vanished, and the speed of an eventual recovery. To this one must add the natural propensity of criminal, political, partisan, military or paramilitary forces to take over governmental functions, which should be a sufficiently strong prod for the President to reconsider his original vision, because the country requires a way out of the hole into which it has fallen. Every Mexican would benefit from a pathway out of this crisis by effective, institutional, leadership, one that is tuned to today’s circumstances.

Unfortunately, the signals emerging from the government have been contrariwise: instead of applauding the society’s activism, the president has criticized and gone against it. His hostility to the private sector is known and has historical roots, but it begs the question: how does he expect to improve the lot of the 70% of Mexicans he claims to care for in the era of globalization without private sector investment, whether domestic or foreign. His way of acting reveals a preference for inciting social conflict, ignoring the potential consequences in terms of recession of poverty.  It is clearly not growth that is important, nor the poor, nor ending corruption or nor contributing to the development of the country. The question is what‘s next.

To date, the President and his government have basked in the support of a broad segment of the electorate, allowing them not to pay for the huge mistakes they have made. But the coronavirus changes those conditions: when these times of governmental absence are over, the time of reckoning and rendering of accounts will come to pass, the real one. This would be a great opportunity to set things straight before it is too late.

https://mexicotoday.com/2020/05/12/opinion-after-the-virus/

www.mexicoevalua.org
@lrubiof

Luis Rubio

William H. McNeill, author of the famous book Plagues and Peoples, begins his text by telling us that he became interested in this theme on reading how a warring people that was so prepared and as numerous as the Aztecs, came to submit themselves so easily to the comparatively tiny troop of opportunists led by Hernán Cortés. The answer is simple: infectious diseases that decimated the Mexica.

Plagues and infections have accompanied humanity from time immemorial. Thucydides describes the impact of a virulent plague that attacked Athens midway through the Peloponnesian War as “the catastrophe was so overwhelming that men, not knowing what would happen to them next, became indifferent to every rule of religion or law. . .” In Pericles’s funeral oration, the famous politician extols the attitude of Athenians in the face of the crisis, despite Sparta’s ending up winning the war and imposing a dictatorial regime. However, viewed in retrospect, Athenian democracy survived and bequeathed to the world what Churchill denominated “the worst form of Government except for all those other forms that have been tried from time to time…”

According to a study by Josiah Ober and Federica Carugati,* Athenian democracy persisted -and, in the long run, defeated Sparta- in spite of the wars and plagues that lasted for years, because the internal solidity of their society thus facilitated it. On emerging from the epidemic, people were intolerant of poor governmental policies and decisions and more demanding of their government.

The big question for Mexico is whether democracy will be strengthened or continue to languish (or worse). The response to the question depends on three factors: first, the strengths and weaknesses that characterize it; second, the quality of leadership: and third, the manner in which the citizenry learns from this crisis, which lessons it derives from it and how it decides to organize itself.

The nature of Mexico’s democracy is well known. Some eighteen years ago, in an official ceremony, a reporter asked each of the leaders of the main political parties whether Mexico was a democracy. The responses proffered were revealing: the then-president of the PRI affirmed that Mexico had always been a democracy; that of the PAN stated that Mexico had been a democracy since 2000; and the PRD president noted that Mexico had yet to achieve democracy. That is, the mere fact of democracy depends on that a party wins the election, not on the existence of a democratic way of governing, which would include components such as checks and balances, equilibrium among the three branches of government, freedom of expression, an independent and effective judiciary, a press independent from the government and boundless respect for citizen rights.

Measured by these criteria, it is clear that Mexican democracy is, rather, weak, which has been demonstrated by the ease with which the President and his party have taken control of all the instances of government, including those that theoretically would be key as counterweights. In a word, the point of departure is not praiseworthy.

In terms of quality of leadership, the panorama is eloquent. We have a President who, due to his not entertaining any association with the decisions of the past decades that he so sweepingly disparages, would be able to count on the elements and the legitimacy to carry out the reforms that Mexico in effect requires. However, his strategy and, in fact, his most basic instincts, lead him toward the opposite: confronting, disqualifying, attacking and moving backward. In building, he dismantles and rather than adding, he subtracts. Not much can be expected of the current leadership, but a pivotal question is what kind of alternative leadership might surface for the future, beginning with next year’s midterm elections. The announcement that the Mexican private sector had secured a huge credit from the IADB to fund small companies during the pandemic is a great beginning.

At the end of the day, what is crucial lies in the citizenry, the latter having been submitted, controlled and pummeled during nearly a century. The entire party and institutional structure was built for control and nothing –including freedom of expression and alternation of political parties in the government- has eroded it in major fashion.

That has produced a peculiar phenomenon, which was illustrated in a study on justice in Latin America of a few decades ago: on comparing the factors that influenced justice among the diverse nations of the region, Brazilian investigators found that Mexico followed very distinct guidelines. In comparison with a much larger universe, the results manifested that there were closer similarities between some ex-Communist nations and Mexico, not in ideological terms, but in the manner in which the dominating and controlling party system had diminished the citizenry.

One generation later, there are innumerable organizational efforts, many very innovative, on the part of the citizenry but there still persist many ancestral political forms, starting with the whole structure of the governing party.

George Bernard Shaw, the English dramatist, said that “Reasonable people adapt themselves to the world. Unreasonable people attempt to adapt the world to themselves. All progress, therefore, depends on unreasonable people.” I fear that Mexicans find ourselves there, at least for now.

*Economist, March 28, 2020

https://mexicotoday.com/2020/05/05/opinion-plagues-and-democracy/

www.mexicoevalua.org
@lrubiof

Luis Rubio

 The corona crisis will become a great excuse for the economic disaster Mexicans are experiencing, but it will not change the nature –or the existence itself- of the problem. The cesspool already lies open.

To illustrate the phenomenon, let us think for a moment about the famous presidential airliner: the avowed objective was to get rid of the plane, for which a sweepstakes was devised that was notlinked with the artefact.The process has afforded the President massive numbers of opportunities to address the issue and to squeeze it dry to the utmost, doubtlessly a smack of political genius, except for one small detail: the time is drawing near, next September, that the sweepstakes will be over, but the aircraft will still be there, with the same obligation to make rent and maintenance payments. That is, the raffle, and the circus surrounding it, will not have resolved the problem generated by the President himself. The problem will still be there.

The same occurs with the economy: independently of the crisis caused by the virus -which is already contracting the economic activity causing a deep recession in 2020- there’s nothing in the horizon that makes it possible for the economy to recover once the trauma has passed. The reasons why the economy has remained paralyzed will not be altered by the virus, before or after, although there is no doubt that they will become more acute along the way.

The best way to describe what is approaching is denominating it the  “perfect storm:” a government that alienated private investment right off the bat; the total absence of a development strategy; the uncertainty in the energy supplies;  falling oil prices; and large unproductive governmental expenditure, at the expense of the other critical budget items, that have immobilized sectors such as construction. Each of these factors was present prior to the appearance of the virus on the spectrum and (almost) all are the government’s responsibility. External factors that modify the panorama for the worse must now be added:  the recession caused by the cloistering; the fall in remittances, the product of the contraction of the U.S. economy, especially in the service industry in which is concentrated a great deal of Mexican manpower; reduction of exports due to the lower demand for automobiles, household appliances, etc.; and growing pressure on public finances due to the diversity in the demands on the expenditure that the crisis itself is generating and, therefore, on the exchange rate.

Of course, no one can blame the government for the health crisis, but, as the saying goes, in reality this is about when it rains it pours, because the economy was going poorly before this affliction, rendering it unnecessarily deeper due to not confronting the causes of the previously existing recession. In a word, the economy was already in free fall when external circumstances accelerated its contraction. In this respect, it is obvious that the President will blame the coronavirus for the recession, but that will not resolve the fundamental problem nor will it contribute to a swift recovery once the immediate crisis is over.

What this crisis will do is to put on display the cesspool, the one existing previously as well as the one that the President uncovered without intending to. The cesspool that existed before is the one that allowed him to win the presidency but that, unfortunately, he has done nothing to eliminate: I refer to corruption. This is the product of one of the characteristics of Mexico’s legal and political system because it grants enormous powers to the authorities (at all levels) to decide who wins and who loses, unfettering huge chances to corrupt. Because corruption is never persecuted, the reigning impunity empowers it in inexorable fashion.  The fact that the President “purifies” instead of punishing public functionaries does nothing other than further establish that ancestral practice. In other words, the government has made no difference whatsoever in matters of corruption: the names have changed (as usual), but the practice endures. The causes are still there.

The cesspool that the President uncovered is not new, but it is much more transcendent because it cancels future growth. Private investment always proliferates when there are propitious conditions for it to prosper, and those conditions may be summed up in the existence of clear rules to which the government adheres and the certainty that these will be complied with. That is, everything refers to the trust that the government generates for those risking their savings and their capital. In addition, governments worldwide bend over backward to attract investors through the building of infrastructure, improving the regulatory and fiscal milieu, as well as leveling the playing field in order to facilitate the process. Regrettably, the present government rejects these premises out of hand and has done everything possible to deny them, the reason why it will not be able to attract investment during the remainder of the current presidential term.

As if anything more was missing from this scenario, the institutional destruction that has taken place, which could seem to be no big deal, has eliminated mechanisms that, for two or three decades, served to engender the illusion that Mexico had changed and that it now has applied itself to grow, albeit since 2018, with greater equity. The current government entertains other agendas not compatible with development.

https://mexicotoday.com/2020/04/28/opinion-before-and-after/

 Twitter: @lrubiof

Luis Rubio

 It is difficult to imagine a more striking contrast in government response to the coronavirus than that evidenced by the Mexican government vis-à-vis the United States and, in general, the majority of the developed world. The president has refused to contemplate anything that is alien to the strategy that he has been promoting since the beginning of his administration. As the saying in Spanish goes, “I am going straight forward and will not deviate.”

I have no doubt that a proactive response from the government to the brewing economic panorama is imperative; however, it is not evident to me that the proposals circulating today in this regard are either suitable or possible. At its core, the generic proposal is for the government to hire (more) debt to support companies that suddenly lost their customers as well as people who became unemployed. The proposals vary, but almost all involve tax credits, postponement of tax payments and of other government-provided services, as well as direct support to companies or individuals. The most complete and disinterested proposal is that of Santiago Levy in Nexos, where he focuses on minimizing the regressive impacts of the crisis by protecting the unemployed, especially the poorest, all while preserving macroeconomic stability so that there can be a recovery as soon as the sanitary emergency ends.

The first lesson that history teaches us and that, I suppose, is what motivates the president, is that every time the government gets into excessive debt, crises come about. In concept, there is no reason to think that this has to be the case, since there are circumstances that justify incurring into debt, but as long as the use of the proceeds allows not only to pay the debt in the future, but also to create public goods that improve the quality of life of the population, increase productivity and/or create assets that contribute to generating wealth for society.

The problem is that Mexican debt, almost never, throughout history, has been used productively; rather, the opposite is typical: public debt is contracted and then used to finance current spending. In other words, unproductive public spending -frequently politically (or electorally) motivated- which not only does not create conditions for greater prosperity, but also distracts productive resources. I would bet that a large part of the indebtedness loaded into the Pemex balance sheet was never used to develop new fields, but for objectives that have nothing to do with the basic activity of the entity. Perhaps they never even reached Pemex… In these circumstances, it is sheer temerity to assume that incurring new debt willreallylead to mitigating the costs of the pandemic. And worse from a government characterized by so many biases against economic growth and those who make it possible.

In addition to the above, the political moment cannot be disassociated from the risks inherent to the health emergency and the recession that deepens literally by the minute. Under normal conditions, as in 2009, the financial markets and the population understand the nature of an emergency and do not panic. In the current circumstances, in which there has not been a single new investment project since the Trump campaign back in 2016 (and the only exception, in Mexicali, has just been knocked down by the president himself), any movement in tax or additional debt could have direct impact on the exchange rate, which is already under pressure. The warning by the top rating agencies that the federal government’s investment grade is at risk certainly does not contribute to a favorable outlook.

What can be done in this context? The obvious is that people who lost their sources of income must be supported, especially those who work in the informal economy, since they are the most numerous and vulnerable. If in so doing those people would also commit to joining the formal economy, everybody would benefit. Also, it’s crucial to support the key industries that have been hardest hit by the crisis, such as those related to tourism.

The second thing that should be done is to modify several lines in the government’s budget to finance this objective; no government in recent memory has made as many such changes in spending as the current one, so there is no reason why this could not be done. The most obvious would be to stop financing white elephant projects that do not contribute to regional or national development, such as the Dos Bocas refinery and the Maya Train. The mere fact of canceling them would show fiscal sense, thus broadening social tolerance for a small growth in public debt.

The crucial thing is not to lose clarity of the objective that is being pursued: all this is to reduce the impact of the recession on the most vulnerable population and to ensure a rapid recovery once the health emergency has ended. To the extent that the priority continues to be transfers to favorite clienteles -the most unproductive spending in economic terms and of dubious political productivity- the country’s economy will contract without the least probability of recoverin. All that withthe risks in terms of governance and criminality that such a scenario entails.

Twitter: @lrubiof

https://mexicotoday.com/2020/04/21/opinion-easy-solutions/

Luis Rubio

Before, in the good times, Easter was a time to keep. Now that keeping has become a semi-permanent state, I set about gathering some ideas, explanations and comments on the current moment, aiming to better understand the situation or, at least, to laugh (or cry) at it.

“I have no idea what’s awaiting me, or what will happen when this all ends. For the moment I know this: there are sick people and they need curing.”Camus, The Plague

“It is obvious that human (and non-human) diseases are evolving with an unusual rapidity simply because changes in our behavior facilitate cross-fertilization of different strains of germs as never before, while an unending flow of new medicines (and pesticides) also present infectious organisms with rigorous, changing challenges to their survival.”William H. McNeill, Plagues and Peoples(1975)

“In the last two weeks, the world economic situation has changed dramatically and for the worse. All the countries of the world are experiencing the repercussions of the Coronavirus. It is too early to provide numbers, but it is certain that there will be a world recession, deeper than the one observed in 2008-2009. The same will happen in Mexico. We must prepare for a severe recession of uncertain duration.” Santiago Levy

“As a candidate, López Obrador told Jon Lee Anderson in an interview: “I always think the same, but I act differently depending on the circumstances.” He has lost that touch: now he thinks the same and acts the same, regardless of the circumstances.”Hector Aguilar Camin

“The President who does not govern himself is unable to command in the emergency. I confess myself surprised by the total lack of leadership in this circumstance.”Jesús Silva Herzog Marquez

“When decision-making is slow in public-health matters, the consequences are grave and serious.” Renowned physician of the National Health System

“The belated reaction to equip and prepare for the Covid-19 is directly associated with López Obrador’s denial of the reality of the pandemic and his resistance to prepare.” Raymundo Riva Palacio

“Mexico quickly went from a punishment vote to being punished for its vote.”Unmissable phrase stolen from Twitter

“The consequences of defunding public-health agencies, losing expertise, and stretching hospitals are no longer manifesting as angry opinion pieces, but as faltering lungs.” Ed Yong, How the Pandemic Will End

“Suppression strategies may work for a while. But there needs to be an exit strategy—be it surveillance, improved treatment, vaccination or whatever. If governments impose huge social and economic costs and the virus cuts a swathe through the population a little later, they will discover that when politicians disappoint the people over something this serious there is hell to pay.” The Economist

“The world changed for the worse, quickly and drastically. We are facing a double emergency, health and economic. Let us act soon and together to avoid further deterioration of expectations and of the environment, which will later be much more difficult to reverse.” Santiago Levy

It is always important in matters of high politics to know what you do not know. Those who think that they know, but are mistaken, and act upon their mistakes, are the most dangerous people to have in charge. Margaret Thatcher

“This crisis came like a godsend to consolidate the objectives of the Transformation.” AMLO

“[The] collapse in presidential popularity has to do… with the poor performance of the government in economic and security matters, and even in the fight against corruption… The collapse is sharp and will not be temporary. There are no improvements in the reality to reverse the fall in support, nor is AMLO changing his way of acting or his decisions, which are generating more and more rejections. On the contrary, theother debacles are coming: the epidemic and the economic recession. It looks very ugly for the country and for the President, if he does not change.” Guillermo Valdés Castellanos

“From now on the presidential term will be different. The President, his team and many of his supporters will find the mourning very difficult. But the fact, whether they digest it or not, is that now they will have to play more defensively. Managing losses, managing splits, dealing with the costs of what they did or didn’t want to do in this contingency. And with the opportunities that all this can represent for the renewal of oppositions.” Carlos Bravo Regidor

“Asking people to choose between privacy and health is, in fact, the very root of the problem. Because this is a false choice. We can and should enjoy both privacy and health. We can choose to protect our health and stop the coronavirus epidemic not by instituting totalitarian surveillance regimes, but rather by empowering citizens.”Yuval Noah Harari: The World After Coronavirus

“We are a democracy. We don’t achieve things by force, but through shared knowledge and co-operation.”Angela Merkel

“But what does it mean, the plague? It’s life, that’s all.” Albert Camus, The Plague

https://mexicotoday.com/2020/04/14/opinion-pests-and-the-pestered/ 

 Twitter: @lrubiof

Luis Rubio

The government and its coterie state that through their election in 2018 they achieved a regime change in Mexico, which explains (and justifies) all the outrages, excesses and problems that characterize the Mexican economy and society today. According to this thesis, the actions taken by President Andrés Manuel López Obrador’s administration stem from a change in the rules of the game and that they reflect a new governing coalition. Therefore, what is happening in the Mexican national stage comprises a novel political reality accompanied by what all this implies with respect to decisions, criteria and actions.

It seems to me that there are three elements that should be analyzed to evaluate what has in fact been occurring: in the first place, determine whether, in effect, a change in regime has come about; in second place, analyzing what it is that the government put into practice in reality and what the latter implies; and finally, evaluating the result.

There’s no one better than Leonardo Morlino, the dean of the scholars of regime change, to help us determine whether such a change has in fact taken place: “there is change of regime when, in addition to the collapse of the key characteristics of authoritarianism, all the components of the minimalist definition of democracy are set up” (Changes for Democracy: Actors, Structures, Processes, 2011). To ascertain whether these have been complied with, Morlino employs a series of measurements that include: Whether the cabinet is staffed by a single party or a coalition; whether the executive dominates the legislature; whether relations between government institutions and interest groups are pluralist or neo-corporatist in nature; and the degree of centralization of power.

Of course, there is no unique or specific gauge that determines whether a political system is democratic or authoritarian or when a change of regime to democracy has transpired. This is about qualitative factors that are supported quantitatively, but the key point (if Morlino would allow me) is if it can be evaluated according to the old rule: in dictatorships the politicians ridicule the citizens, while in democracies, it is the citizens who poke fun at the politicians. The problems with these measurements, –comical or analytical- is that they do not help us much because the traditional Mexican political system was so powerful that it was able to withstand the mockery without being a democracy.

In practical terms, the post-revolutionary regime underwent diverse adaptations throughout the 20th century, concluding with the creation of a professional, citizen-backed electoral system which allowed the alternation of parties in power. Those rotations created widespread spaces for freedom of expression and political competition, but they did not modify the essence of the regime dominated by a political class with access to privileges and benefits alien to those of the population as a whole even today under President López Obrador’s party, Morena.

What undoubtedly changed with the government of President López Obrador is the composition of the political coalition that sustains it, from which arises its own particular way of allocating resources, budgets and priorities. That change has been very steep above all because it has been accomplished in tandem with the elimination (real or virtual) of institutions constituted to (supposedly) limit the power of the presidency. However, if one analyzes the daily exercise of power that defines the López Obrador administration, it is not very distinct from that of its predecessors: the use of the formerly denominated “meta constitutional” attributions of the presidency is an everyday event (in fact, much larger than in the recent past); the demands of loyalty above that any other value are ubiquitous; discretional decisions (therefore, arbitrariness) in governmental action surpasses anything observed since the 1980’s; and the forging of clienteles with public monies is crucial, as is the absolute impunity of those in close proximity to the administration.

If by regime change one understands not Morlino’s definition but rather the reenactment of governmental practices of half-century ago, Mexicans are experiencing at present a regression in matters of democracy in a country in which democracy never came about beyond in electoral affairs (as fundamental as that is). The unipersonal exercise of power does not constitute a new regime, but instead the reenactment of the old one that, in reality, never left. It is, at the end of the day, the same old wine in a new bottle.

The problem of the attempt to reenact the old political system does not lie in its unviability (as it is evident present by observing the dreadful economic and health policy results, to cite two obvious examples), but in its incompatibility with the 21^st century. The old political system worked because it matched with a worldwide moment during which the governments were almighty; in the digital 21st century, markets, the integration of supply chains and the decisions of individuals are in command. One may like or dislike this, but it is the clash between of these two components –the new/old political system and the way the economy functions in the 21st century- which explains the present economic stagnation. And there is no reason to anticipate that this will change once the current health emergency ends.

 Twitter: @lrubiof

https://mexicotoday.com/2020/04/07/opinion-regime-change/

Luis Rubio

Three expressions sum up the disagreement characterizing the country’s economy at present and that explain the paralysis (stagnation with a strong propensity toward recession), lack of progress and bad prospects. Presidential rhetoric will camouflage the problematic with grandiose phrases such as “this is not a change of government, this is a change of regime,” “the fourth transformation” or “the poor come first” when, in reality, what is taking place is swift deterioration.

Some of the phrases that have become prototypes of the AMLO government are revealing of its world vision, but especially its clinging to a specific era: “hugs not bullets” and “I have other data” reflect a way of conducting politics and confronting the issues that the country is facing, but none is more indicative than the one the President has expressed numerous times: that “the economy should be subordinated to political decisions.” I do not know of, nor have I observed any politician throughout time, who does not desire the latter: not so many decades ago, governments effectively controlled and managed the principal variables that make the economy function, but that scenario disappeared in the last third of the past century not because of the will of someone in particular, but due to technological change and the sudden emergence of instant communications that has overtaken the world. It is not by chance that, since that fact, there is virtually no country on the planet –including Cuba, North Korea and Vietnam- that is not geared to attracting private investment, doing this not for pleasure but because there is no choice.

I see three key issues that explain the paralysis Mexico is experiencing in economic matters that derive from the latter. First, the nature of the economic world in the XXI century and why it clashes with the governmental strategy; second, the importance of procedures and, more so than anything else, of trust; and, third, the cesspool laid bare by the President himself.

In terms of the economic world, the XXI century reality bears no similarity to that of the mid-XX century in that the government maintained a closed and protected economy. In that era, the government subordinated economic decisions to those of politics, but that disappeared because of the way in which the world’s ways of producing evolved (the so-called globalization and supply chains) and, particularly, due to the ubiquity and availability of information outside of governmental control. Once the economic world was liberalized, it was no longer under the control of governments and there’s no going back, unless there’s a disposition to generate a depression.

From the latter, there derives another fundamental change in the political relations surrounding the economy: from the moment that controls in matters of investment, exports and imports disappeared, the government -all governments- had no greater alternative than that of dedicating itself to convincing their citizens as well as the community of investors, businesses and financiers, both domestic as well as international, of the good of their projects. Once the world became the prime space of economic action, all governments competed for the same investment and the only way to capture it is to create conditions that will make it attractive, together with sources of certainty that generate trust in them. The decision to save and invest passed from the governments to the citizens and investors and there is nothing in this world, and even less so the pretension of a “change in regime,” that will change that. Exactly the same transformation took place in the political arena, i.e., the INE (National Electoral Institute) and the Electoral Tribunal and the Supreme Court.

Finally, the President opened a sewer of which he is not yet aware but that radically affects the present moment. For many years, one government after another constructed institutional mechanisms designed to confer certainty on economic agents and on the society in general. Thus were born the autonomous institutions, each in pursuit of a specific objective: access to information (National Transparency Institute, INAI); regulation of the energy market (CRE), and the National Hydrocarbon Commission, (CNH); the Human Rights Commission (CNDH); trust in the electoral process and regulation of political parties (INE and the Electoral Tribunal); and the resolution of disputes among the branches of government (the Supreme Court).

Today we know, in retrospect, that the validity and transcendence of these institutions was due not to the legitimacy that they enjoyed, but instead to the respect that successive presidents and administrations allocated to them. The easiness with which the President has neutralized or eliminated these institutions illustrates their intrinsic weakness. What the President does not recognize is that, on implicitly declaring “the king has no clothes on,” he did away with key wellsprings of certainty for the citizenry and for investors and savers. Once exposed, that sewer has become Pandora’s Box.

The problem now is to regain the trust that those entities engendered, a task complex in itself, but impossible for a government whose raison d’être is to deny that the problem exists or that it is a valid one. The economic-growth crisis and the way in which the COVID-19 will likely deepen it will force the government to act. The question is whether he’ll act in a constructive or in an authoritarian mode.

Twitter: @lrubiof
https://mexicotoday.com/2020/03/31/opinion-an-unknown-world/

Luis Rubio

Professor Huntington* caused a scandal when, in the middle of the Cold War, he wrote that what is important in a government does not lie in its ideological characteristics, but in its effectiveness. What gave rise to the uproar was his affirmation that the U.S., the U.K. and the Soviet Union had systems of government that worked, while many nations within the American sphere of influence lacked that capacity. Pairing the USSR with the U.S. was pure apostasy, but the argument was well sustained: the three nations, penned Huntington, have strong, adaptable and coherent political institutions, with effective bureaucracies and mechanisms to resolve political conflicts. The key point, and therein lies its relevance for Mexico, was that despite their differences, in none of the three nations was there impunity.

Impunity has become the main characteristic of present-day Mexico: there is literally no space in public life where there is compliance with the rules, procedures or laws. Although this statement may seem excessive, the evidence is overwhelming: there are criminals because there are no sanctions nor the capacity (nor the interest) to restrict or impose limits on them; murders, extortion and abductions go unnoticed, as if they did not exist; the administration juggles budgetary items, rigs public consultations, commissions public works without calling for bids, does away with the purchase of medicines and reduces salaries, all in order to transfer funds to the government’s electoral projects, with no impediment; the government cancels contracts without compliance with the law or established rules; organized crime terrorizes the population and levies protection money without the authority ever showing up; the police are corrupted (and use the laws to abuse them in their favor), without punishment; the functionaries of previous administration, just to cite one example, stole without compunction, but are only persecuted when it is politically convenient for the current government. The point is clear: impunity is the prevailing law.

The matter is not partisan, ideological or political. Impunity banishes all vestige of organized society because it implies, by its very nature, the inexistence of rules, laws or contracts. When a society descends into the realm of impunity, civility disappears as does civilization, because the only thing that counts is the power of the most powerful, formerly known as the law of the jungle. The paradoxical part is that each administration claims that its officials are pristine, unpolluted and untouchable, permitting it to penalize its predecessors, with no limit. However, those who boast of power and victimize their enemies, sooner or later find themselves on the other side of the fence. The pretense that today, in contrast with the past, there’s no impunity is sheer fantasy.

The trademark distinguishing the present administration resides in the construction of an entire legal scaffolding, beginning with the fiscal and, presumably, being followed by the judicial, whose true purpose is intimidation and threat. With powerful -and abusive- laws in their hands, the government today has the possibility of jailing citizens without a judicial order, expropriating their property (eminent domain) without there being a trial, and freezing their bank accounts with a simple administrative order. Hard to imagine a clearer and more patent definition of impunity.

Impunity is what explains that Mexicans live under the threat of permanent insecurity, bureaucratic abuse, corruption, sale of government positions, the President’s “purification” of corrupt civil servants, scamming investors who buy clean-energy bonds, refusal to authorize the mega-investment of a brewery in Mexicali and, the crown jewel of impunity, the pretension of Pemex and of the Ministry of Energy to keep the Zama oil field developed by the Talos enterprise, violating the contracts and rules and regulations in force.

Impunity is an old malady of the Mexican political system because the laws confer upon its functionaries enormous discretionary, in fact arbitrary, powers, which render possible any action on the part of whoever holds the power at any given moment.

There is no evil worse than that of impunity because it implies the total absence of rules, thus, of certainty, the mother of development and civility. Worse yet when it becomes the raison d’être of a government.

While impunity comprises part of Mexico’s DNA, the governments from 1982 onwards attempted to erect institutional scaffolding that would check or diminish its reach. The real tragedy of the present government is that, on doing away with this entire platform, it became evident that the only thing that interests it is imposing itself by force or intimidation. The long-term cost of this is indescribable, regardless of whether the government functionaries of today and their acolytes can understand it.

The expropriation of the banks in 1982 threw open Pandora’s Box because it flaunted force and impunity. What the current government has done is to appropriate that torch and take to its ultimate consequences. The result of last time was the lost decade of the eighties; the impact of the present one will not be identical, but it surely will not be better.

*Political Order in Changing Societies

https://mexicotoday.com/2020/03/24/opinion-impunity/
. Twitter: @lrubiof

Luis Rubio

 “The history of Mexico, says a well-known analyst, is first and foremost the history of personalized power -of the concentration of all the levers of power and resources- in the hands of a leader standing above society, of a succession of leaders and their regimes. Breaking away from the post-PRI era required a leader who could act as a battering ram to destroy the old order. That person had to be an outstanding and charismatic politician with the courage to break with the past and force the political class and state authorities to leave the past behind. That person needed a strong personality and the ability to lead. However, to introduce a system based on political rivalry and competition requires quite a different kind of leader, one prepared to ’abdicate the throne’ and transfer at least some executive power to other institutions.”

Even when a new society and new institutions began to emerge –continues the author-, the government played by the old rules. If the fundamental principle of democratic elections is that “the rules are clear, but the results uncertain,” the elite was determined that the rules should be uncertain and a result favorable to itself guaranteed. Rather than make provisions for an alternative regime and rotation, the elite stressed continuity. Samuel Huntington’s observation that two election cycles are sufficient for a country to become democratic proved not to apply to Mexico, where regular elections provided a smokescreen for backsliding from political liberalization.

Society was too inexperienced to develop independently into a civil society. The new occupants of the presidency had come to power on a wave of democratic enthusiasm, but not only had they no intention of promoting the development of civil rights and liberties, they systematically obstructed the process, turning their backs on the democratic forces that had helped their rise to power.

The technocrats supposed that introducing a capitalist economy would be enough, and they ignored the need for new institutions and the crucial importance of subordinating the state to the rule of law. As a result, they reconfirmed Adam Przeworski’s conclusion that without stable liberal institutions, a sustainable liberal economy is impossible. Indeed, in the absence of viable independent institutions and the rule of law, economic reforms can become a destabilizing factor that pushes the ruling class toward authoritarianism in order to defend its interests and its property.

Could this leader and this elite, given their origins and ignorance of anything other than the old political system, have behaved differently? The reforming governments did not foresee the consequences of their endeavor, but all reformers start by shaking the foundations of the status quo without knowing where their actions will lead. If they could see into the future, no doubt any would have second thoughts.

In truth, all Western leaders made a double mistake, first, by relying on the local reformers and believing that they would guarantee a successful transition, and, second, by emphasizing the economy and neglecting the role of political reform.

Mexico’s present or future? Or is it its recent past? The analysis is revealing and looks impeccable. However, none of it is about Mexico, even if it appears to have been written recently by an expert well versed in its reality. In fact, the author, Lila Shevtsova, is talking about the failed transition in her own country, Russia,* in a book about the first two decades of post-Soviet Russia. All I did was pick a few fragments and replace Mexico where it said Russia (or Kremlin) and “a leader” or president, where the author wrote the name of one of Russia’s presidents.

What’s remarkable is that the similarities, but also the differences, of a process of profound political and economic change as that that has characterized both societies, reflects the complexity of the challenge that the reformers undertook in each nation without really understanding the difficulties which would have to be faced down the road and, particularly, the forces they were unleashing.

It’s clear that both nations had to break away with the past because the status quo ante proved unviable and unsustainable. Neither the USSR nor Mexico launched their process of reform on ideological grounds; rather, they did so due to the paralysis and series of crises that each had experienced. The result was, as the title of the book says, a lost transition that, while having advanced, did not reach the promised port of landing. The new status quo has proven uncertain and remains far removed from a liberal and competitive economy, characterized by development, stability and democracy.

*Lost in Transition

 Twitter: @lrubiof
https://mexicotoday.com/2020/03/17/opinion-similarities-and-differences/

Luis Rubio

The big question is how Mexicans are going to get out of this one. Aside from the President’s popularity, all indicators are pointing the wrong way: the economy stagnates, employment does not grow, the government continues to amass legal and fiscal instruments to persecute the citizenry and there is not a single topic –from security to childhood, passing health on the way- in which the government can exhibit any improvement.

Conflict, whether social or political, has become the raison d’être of Mexican reality because therein are summed up the expectations, resentments, envies and aspirations of Mexican society as a great collective. Some perceive the government as good, others reprove it; some trust that things will improve, others are sure that the only possibility lies in things worsening.  Independent of affiliations, phobias or preferences, the contradictory rhetoric of the quotidian declarations does not contribute to creating a future in which all citizens can partake.

A clear majority of those who voted did so for today’s Mexican President López Obrador. I entertain not the least doubt that much of the anger and many of the grievances that encouraged that vote are absolutely legitimate because, despite the advances, a competitive economy was never consolidated, one sufficiently broad in scope for all Mexicans to benefit from. The vote of tedium reflected a clash between reality discerned with decades of rhetoric that oversold the future, but delivered poor results.

If one brings this situation into focus as a problem requiring a solution,  it is that the country urgently needs new institutions, a term that has acquired a bad name in the current government’s morning discourses,  but one that is nonetheless transcendent. The problem is that, in the existing chain of events, it is nearly impossible to build institutions that satisfy its sine qua non condition of success: having widespread support and recognition. The environment of conflict and polarization renders it highly difficult to create and consolidate new institutions: at present, the country is encountering two great currents running against the flow: those that want to break with the status quo at any cost and those who demand certainty that can only derive from solid and non-contentious institutions. Beyond the side on which one finds himself in this antinomy, what is certain is that it is impossible to achieve stability and predictability in a society that lacks institutions that are credible for the majority of its citizens.

The milieu is so vice-ridden that anything the government proposes ends up being conceived as an abuse by one part of the population and as a given by the other. The opposite is equally true: the Morena majority automatically condemns, and is ready to dismantle, everything in existence prior to its advent, although many of the best things existing today –and that, doubtlessly, its base appreciates- are the product of the reforms of the recent decades.

The advances of the last decades are not few nor are they small: freedom of speech; free elections; a perhaps primitive health system, but infinitely superior to the madness into which the current government has incurred; access to innumerable first-rate goods and services at infinitely lower prices (after inflation) than those that existed before. At the same time, it is evident that there is a myriad of things, in terms of the conditions of daily life as well as the functioning of the governmental system, that are unacceptable, bad, corrupt and exceedingly inefficient. I do not doubt that, soon, we will find that the stalwarts of Morena, now at various levels of government, will be found immersed in problems of corruption, as occurred with PAN party members, the Puritans of those times. The problem does not lie in persons or parties, as much as the President absolves them, but rather in structures and incentives. That is the reason that the country will not get ahead unless it adopts a new legal and institutional structure. In contrast with the past, the latter would have to be legitimate to achieve its objective.

The dispute with respect to the INE was born in 1996 and reinforced in 2006 because the PRD party, many of whose constituents now espouse Morena, did not participate in decided fashion, and was in fact excluded, for good or bad reasons. Legitimacy was not achieved because there was no consensus, at least once, for this crucial institution.

There’s an additional phenomenon: much of public life consists of negotiating and a serious negotiation cannot be conducted in public. Mexicans have made theirs the myth of transparency, which is obviously necessary, but not everything has to be transparent. In Congress or in the Supreme Court, for example, transparency is indispensable but not in discussions and negotiations among the actors because it is there that, as Bismarck noted regarding sausages, the future is constructed. What is public ends up being merely a show and spectacles do not lead to good government.

Conflict can only come to an end with negotiation leading to legitimacy. The question is whether the government is in the business of promoting and deepening the conflict or building legitimacy. The women’s march of March 8 will be a bellwether of where Mexico stands today.

Twitter: @lrubiof

 https://mexicotoday.com/2020/03/10/opinion-conflictand-institutions/