Luis Rubio

Coins have two sides and, at this moment in time, that of the government does not tally. On the one hand, the budget assumes a sensitively higher growth rate next year compared to that of the year coming to an end. To achieve this feat, the government itself recognizes that a higher growth rate can only be attained with private investment. But, on the other hand, the legislature power lives to approve laws that not only discourage investment, but that also annihilate it. The question is whether the two sides of the government (given that the president’s party has full control of Congress) communicate between themselves and understand the implications of their differences.

The inherent approach to the budget is exceedingly sensible: the collection of taxes can be raised, this accomplishing the expenditure goals proposed by the government were the oil production platform elevated and were the economy to grow at ca. 2%.  Many have disparaged these two premises as naive but, from the viewpoint of the Mexican Ministry of Finance, they are achievable if and when the conditions are auspicious: at the end of the day, those numbers have been achieved in former years and there is no structural reason to think that this could not happen again.

However, the actions of the Legislature have been constructing a scaffold that is a direct attempt against the possibility of the growth of investment: three laws have been passed that are not only against investment, but also place on the defensive the entire tax-paying population. The Extinction of Domain law entails such lax and wide-ranging definitions of what can be taken over by the government that it can be applicable to virtually any person. The change in Article 19 of the Mexican Constitution grants such vast powers to the authority that there is no limit to what it can come to do, independently of whether its motivations are legitimate or political. Finally, the recent legislation in terms of fiscal matters places up against the wall literally any citizen, not only those entrepreneurs who acquire fake invoices. Of course the business of the so-called invoice mongers must be eradicated, but the law that came into being positions any tax payer on the threshold of prison.

Little by little, the scaffolding has been erected of a formidable tool that, in the hands of a vengeful governor or authority or one with an agenda, can affect the whole of the population. In its most minimal expression, it can intimidate any individual, involved in any activity. There are two possible explanations for this: one, that there lurks a Machiavellian plan behind these initiatives, oriented toward controlling the totality of the citizenry. The other, that each bill responds to the demands of distinct groups found within the Morena constituency, prompted to a greater degree by a revanchist spirit, probably against big business. I tend to think that the latter is more probable, but the question is irrelevant: what has been built is a lethal instrument for individuals, businesses and in general, for investment. The same could occur with savings on the passing of the bill that has been sent to Congress concerning matters of the individual retirement accounts (afores) and the only thing that could impede this is the clairvoyance with which the opposition in the Senate has conducted itself.

The question is whether this is about a unified government that proposes the revamping of the manner in which the country functions in order to succeed in better distributing incomes and to eradicate corruption and impunity or whether what we are seeing represents opposing views, either partially or totally, that on accumulating, produce a budding authoritarian state. Were it the former, the objective is one that cannot be accomplished because it would only succeed in paralyzing the economy, therefore the country. Were it the latter, the good proposals presented in the budget would be annulled by those favoring intimidation and threats to certainty and viability in the country’s long term.

Those driving the consolidation of an authoritarian government with all of the instruments and means to intimidate and control the population outright, from the most prominent businessman to the most modest peasant, evidently assume that the government can impose its will and that the population, all of it, has no alternative.

The reality is very distinct, as proven by two examples: on the one hand, it’s been quite obvious, for decades now, that the humblest Mexicans migrate to find the job and developmental opportunities that the politicians and bureaucrats have traditionally denied them. Migrants vote with their feet and, along the way, whether interpreted thus or not, they have de facto censured and failed a whole system of government.

For their part, the companies –medium and large- have been growing and expanding the length and breadth of the earth as a natural process of evolution, identical to that characterizing the rest of the planet. In the same way that an Audi or Toyota plant is installed in Mexico, Mexican companies grow and are set up in Germany or Japan. If there had been a much larger domestic market, their foreign expansion surely would have been less. The fact that the economy has grown so little, in average, comprises another piece of evidence substantiating the poor governmental performance throughout various decades.

The problem for the government is that it appears to believe that greater control will produce a better result. The evidence has been witness to precisely the flip side of the coin: without a strong source of trust in government, not even the peasants will save or invest.

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@lrubiof

Luis Rubio

In 2018 two contrasting, but equally representative and valid, Mexicos manifested themselves: that of an angry and resentful population that wanted to change its reality, although not in possession of a clear course, and the other, which wanted to have access to a modern education, successful global insertion and a true capacity for raising productivity in a context of the Rule of Law and transparent rules of the game. The former cohort voted en masse for AMLO and expects prompt results. The latter perceived improvements throughout recent decades but is not satisfied. They voted differently, but they confront -we confront- the same challenges.

The electoral results at the regional level of Election Day 2018 are very revealing: voter abstention was relatively high in regions where things had improved substantially, while it was very low in zones where there had not been growth. That is, people are not satisfied with the pace of the advance, but everyone wants progress, everyone wants improvement. The paradox, in itself demonstrative, is that those who have benefited (as in the states of Aguascalientes, Querétaro and, in general, in Mexico’s North and East) are unsatisfied with the improvement not being faster, while those who have not benefited at all demand being included in the benefits.  No one wants to go backward: what they insist on is going more rapidly, but with better distribution of the benefits.

It is not two visions for the country, it is two contrasting realities after decades of partial reforms, insufficient and, in many cases biased. The reforms initiated in the eighties were unavoidable because the model of development that had been so successful in the post-WWII era stopped working and, on attempts to maximize it along the seventies, the collapse was caused of governmental finances in 1982, and then many years of economic crises and almost hyperinflation. It is not true that the country found itself in a nirvana at the beginning of the eighties: rather, it was a mirage, the product of an instant of high oil prices and the great availability of foreign debt, both, as Lopez Velarde would have said, underwritten by the devil.

The problem of the reforms was not the imperious need for them, but instead the criterion that ushered them in: reforms were made not to alter the status quo, but to make it viable. The objective was to reactivate the economy after years of incessant crises, in order to maintain the old political system intact. Under this premise, it is not by chance that many political, union and business bosses preserved their privileges, making progress impossible for vast regions of the country, sectors of the economy and parts of society. It is also not surprising that the indexes of poverty and marginalization were maintained or that corruption persisted.

One must bear in mind that the reforms were driven by the technocrats and limited by the politicians, whose interplay produced inevitable contrasts and contradictions. What is ironic about AMLO’s proposals is that he has excluded those who would have been his best allies in satisfying the claims of all Mexicans: similarly for those who feel dissatisfied despite it having gone reasonably well for them as for those who are dissatisfied because their lot has not improved in the least. Perhaps this explains the enormous contrast between the approval that the person of the president basks in and the meager support afforded his initiatives. In colloquial terms, no Mexican would wish to continue living by a thread depending on old technologies (as shown in an extraordinary video where AMLO proposes to preserve donkey-driven old mills) when they aspire to live like those appearing on television. The solution does not lie in going backward, but in making haste forward under the assumption of inclusion and social mobility. That is where AMLO could indeed transform Mexico.

If the scenario is so evident, why are there no massive marches in favor of a better education, clear-cut and reliable rules and an end to extortion and impunity? Without doubt, a great part of the explanation can be found in the reality of the country’s fiefdoms: whatever the sphere within which each Mexican moves, there is always a local mafia-like boss or special interest that holds that ability to move in check. Some of these are quite obvious, such as the mafias of organized crime and those of education, like the National Confederation of Education Workers (CNTE), but others are more subtle: clientelist donations in which the president delights have the effect of mollifying in place of resolving problems; the manipulation exercised by the electronic media, which closes, rather than opens up, opportunities to those living furthest from the possibilities of development that today’s world offers, and exacts; and, no less important, the fedupness engendered by decades of promises and evidence of corruption. People are not foolish and do understand, but their possibilities of acting are scarce in the absence of propitious conditions or the presence of oppressive leaders.

The electoral result of 2018 was the product of insufficient reforms that left the majority of the population dissatisfied. It is time to shoulder responsibilities and build a new future. Would that the president were willing to be at the helm of this.

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Luis Rubio

The law says it, therefore it must be true. Cicero would have said: Lex dixit, verita est. Under this benchmark, if the law prohibits it, it does not exist: there are no abductions, there are no thefts, there are no homicides, there is no domestic violence. All because it is prohibited by law.

At least that is what Mexican legislators tell the citizenry repeatedly: the bulletins emerging from Congress are always the same:  “we have now legislated, thus the problem has already disappeared.” Except that, everybody knows, nothing changed, except what is published in the Government’s Gazette: thousands of pages of new legislation that changes nothing in the reality: the abductions and the thefts and the corruption all continue. The only thing missing is that some legislator or the President would decree that there was happiness. With that, Mexico’s problems would be history.

The politicians, and especially when they are candidates, bend over backward vowing that they will resolve all of the problems: some because they are the personification of the good, others because it would bring the Rule of Law in daily life. For those who live in the earthly world, in which problems do not resolve themselves nor with more laws and useless directives, pledges of legality are vague, reiterated and false.

Legality has become a rhetorical myth: everyone promises it, but no one defines it. For those shysters in government, if it is written in the law, it is legal and, therefore, Mexicans live under the Rule of Law, which has led to the practice of modifying the law so that what the government wants can be done. What all these politicians do not understand –equally those in the small, distant demarcations and those who feel that they are superior- is that the essence of legality lies in that the authority cannot change the law at will. That is, legality is impossible as long as someone has the power to change it without proper counterweights.  ­

The Rule of Law consists of three very simple things: first, that citizens have their rights (legal, political and property) perfectly defined; second, that all citizens know the law beforehand; and third, that those responsible for making the law complied with do so in a manner in accord with the rights of the citizens. That is, legality implies that both parts -the citizenry and the government- exist in a world of clear, known and predictable rules that cannot be modified in willful and capricious fashion, but by following a procedure in which there is the prevalence of checks and balances whose core characteristic would be respect for the rights of the citizenry.

This definition, although succinct, establishes the crux of the platform that regulates the conduct of a society.  When that framework is in place and respected and compliance is enforced, the Rule of Law prevails. When the rules are unknown, changing or ignorant of citizens’ rights, legality is non-existent.

It is in this context that the problematic that the Rule of Law faces in the country should be analyzed. The natural propensity of Mexican politicians and attorneys (and, more recently, the OECD) is to propose more laws instead of attending to the underlying problem. That basic problem is very simple and in this lies the dilemma: legality in Mexico does not exist because those endowed with political power have the capacity to ignore the law, violate it, modify it to their liking or apply it, or not, as they please. That is, the problem of legality in Mexico resides in the enormous power concentrated in the government and the so-called political class –and, increasingly, in one person- and that allows it to remain distant and immune from the population

There are two components of the currently prevalent “Rule of the Unlawful”, as Gabriel Zaid defined it: one component is the huge, excessive latitude and discretion -which ends up being arbitrary- that is granted to the authorities by all of the laws and regulations, from the police officer at the crosswalk to the President of the Republic. Governmental officials in Mexico decide who lives and who dies (or who has to pay a bribe) because the law de facto concedes this faculty to them. This is not something that materializes by error: this is the manner by which the political system is nurtured and preserved, the way that kickbacks, corruption and impunity are paid off.

The only way to build a regime of legality is by removing the extreme powers that the political class holds, and that can only come about through the individual members own volition –or by through effective leadership that recognizes that therein lies the key source of impunity and corruption-or by a revolution. There’s no other possibility.

At the risk of repeating an example that is unexcelled, the government of the 1980-90s understood that the absence of the Rule of Law rendered it impossible to attract private investment, without which economic growth is impossible. Thus, the raison d’être of the North American Free Trade Agreement was precisely that: a space of legality where there are clear and known rules and an authority that makes them be followed. That regime was adopted because the government at the time was willing to accept “hard” rules in exchange for investment.

If we Mexicans want a regime of legality, we will have to do the same for the whole country, for the entire population, for all citizens. Therein is the revolution that Mexico is lacking.

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Luis Rubio

In memory of Rodolfo Tuirán

The government changed and the citizenry’s perceptions changed, but what has not changed is that particularly Mexican propensity to destroy everything that exists to build something totally new, without taking advantage of either the good of the past or the lessons of previously committed errors. Each president thinks that they have been singled out as superior beings to make their own mistakes and orchestrate their own botch-jobs.

Above all else, Mexico’s political system leads to everything being conceived in political terms and not as a function of development:   what is important is to gain power and disregard citizen needs and demands. Therefore, the wheel is reinvented every six years, solutions are promised without conducting a diagnosis of the problem to be solved, and programs are cast aside because the newcomers –every six years- want to inflict their biases instead of building on what exists due to mere craving for change.

The point is obvious: there is neither continuity nor the least interest in learning from the lessons of the past to improve the future. How, in this context, will it be possible to progress?

The incongruence between the discourse and the results is pitiful and everyone sees it. A new president arrives –at any echelon of government- and the first thing they do is dismiss those who do know, to summarily bring in their own experts.   Of course the new ones don’t know anything, but they do know one thing: what exists, what was done in the past, is not good. This so very Mexican tradition takes place every six years without distinction between persons or ideologies.

The new team arrives full of assuredness and spirit but without knowing the reality of what they will be up against. What they do know is that the outgoing team is incompetent and ignorant (and, now, corrupt), thus it is not necessary to consult or learn from it. In that first replacement the existing experience and memory, however little, is lost, which explains the highly deplorable results that ensue when crucial entities –such as public security, the  Attorney General’s Office, the Department of the Interior, and the Treasury- come into play. Rather than an uninterrupted succession, the new team begins to push the stone up the mountain, like Sisyphus in Greek mythology, never reaching the summit. By the time the public officials have learned, it’s time for the new team to push the stone up one more time.

Of course, there are many things that should change in the country, but there are many others that were working reasonably well. The unwillingness of our system of government to differentiate between these two realities accounts for, at least to some degree, the stubbornness of abandoning what did work instead of concentrating the new government’s efforts on the matters that in effect require a radically new conception.

The result, observable in one six-year term after another, is that the existing programs never reach fruition or reveal their potential for resolving the problems supposedly to be attacked. In fact, most of the programs that are adopted typically respond more to prejudices, preconceptions and ideological visions than to consolidated and tested out diagnoses about the specific problem.

For example, today very cheap gas is imported from the U.S. because in that country there is a great overproduction, but that circumstance will change as soon as the liquefied natural gas terminals currently being constructed there start functioning. What would be rational would be to prioritize Pemex’s very scarce resources for developing gas wells rather than building a new refinery, when there are several others operating very much under their capacity and, in addition, the world gasoline market is much more stable and predictable than that of gas. Construction of a new refinery responds to an ideological vision, not to a diagnosis of the circumstances characterizing the fuel market or its potential evolution.

What is striking about Mexico is that the country progresses despite the government’s proclivity for reinventing the wheel every six years. What is not so striking or difficult to elucidate is the persistence of ancestral problems such as poverty and the ever increasing backwardness experienced by the country’s south. The country advances in spite of the government and, at the same time, the government renders it very difficult for the entire country to emerge from the vicious circles stemming from the lack of continuity of programs and public policies. This reminds me of Bertrand Russell’s famous saying: “The whole problem with the world is that fools and fanatics are always so certain of themselves, and wiser people so full of doubts.” If we replace the fool with the novice and the wise with the experienced, we find therein a good part of the explanation of Mexico’s perennial underdevelopment.

In Mexico there are many things that should change to ensure a peaceful coexistence and one without violence, in order to reduce poverty and create opportunities for the upsurge and development of millions of new enterprises and afford opportunities to today’s youth for them to be successful when they are adults and become incorporated into a world of work dramatically distinct from that conceived of by current educative programs. If we’re going to reinvent the wheel, this should materialize in these spaces, because this is where the future of the country lies.

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Luis Rubio

The presidential strategy has been very clear: concentrate and consolidate his power. His expectation is that, on re-creating the schema of the strong presidency from one half century ago, the economy will automatically respond. The reality has proven to be quite different: private investment has contracted and the economy has decelerated, with a high probability of entering into a recession. To counteract this tendency, the government has recruited sympathetic businessmen, inciting the reactivation of investment. The objective is commendable, but inconsistent with the environment in which it occurs.

The nodal ingredient for achieving the growth of the economy is private investment. That is how the government understands it, thus its promotional activism; what these initiatives do not take into account, or recognize, is that there is no investment because everything the government has been doing has inhibited and impeded it. The problem does not lie in the logic of the investor –which is obvious and absolutely predictable- but in the governmental instigation to render this impossible on terrorizing potential investors.

During the last year, the government has devoted itself to destroying all the elements that make investment possible and attractive, beginning with what is foremost for the investor: certainty. The blue streak of attempts against certainty started with the cancellation of the new Mexico City airport and proceeded with barrages of persecutions without a judicial order, the daily announcement of new investigations, the approval of the Asset Recovery Law (Extincion de Dominio), which makes any person vulnerable and submits them wholly to the bureaucratic and political discretion of the head honcho of the moment. That is, the government has addressed itself to eradicating any source of certainty and to terrorizing precisely those whom the economy’s recovery depends upon and whose actions determine the rate of growth of the economy and, thus, any advance on the struggle against poverty, two of the promises of the president.

As if this were trivial, there is no morning newscast in which a source of certainty is not attacked: one day it was the Human Rights Commission, another day a journalist, followed by disqualifications of a certain entrepreneur. That is, there is a systematic creation of fear. In addition to the latter, the dismantling, intimidation or weakening of all instances of counterweights on the executive power –ranging from so-called autonomous organs, each relevant in its sphere of competence, up to the Supreme Court and the Bank of Mexico- constitute effronteries against certainty.

The interesting part of the rationale of the onslaught is that it replicates a past era, which contradicts all the beliefs and statements that, for more than a decade, have characterized Mexico’s current president. While AMLO vowed to wipe out corruption and strengthen justice, the president’s actions have gone in the opposite direction. Instead of addressing the deep causes of corruption through the strengthening of the justice system, the government has opted to reproduce the successful way that President Salinas acted. Nothing wrong with that, except that this is taking place in a very distinct context, in terms of the presidential project as well as the nature of the world economy three decades later.

Salinas procured the consolidation of his power in order to embark on a profound economic transformation.  Independently of the result, his acting opened spaces for him to confront unions, entrepreneurs and political leaders, with this gaining wide-reaching credibility among the population. The nodal point is that, behind the strategy of consolidation there was a strategy of economic development compatible with the world of the time. None of that is certain in the case of the government of López Obrador.

Within this context, it is inconceivable for private investment to grow, however many the exercises of promotion, invitations, pressures or squalid renegotiations. On the globalized planet of the XXI century, investment has no home:  it moves in an instant to where there are opportunities and, above all where there is clarity of course and certainty in this respect. The government’s game plan has advanced in the diametrically opposed direction.

History, said Marx, first repeats itself as a tragedy and afterward as a farce. Beyond the strange irony of mimicking the master plan followed by Salinas, the enemy AMLO most frequently alludes to, the onslaught undertaken by the present government entertains impeccable political logic, but crashes against a brick wall because it lacks a strategy that everyone –beginning with the investors- can understand.

Salinas acted in the context of the old political system: he imposed his mark with the detention of the drug lord la Quina and other public personages, in this manner acquiring credibility as a capable president and one willing to break with those opposing his project. Thirty years later, the government lacks a similar, long-range-future vision and project, and is working in a radically distinct political climate: now that same strategy sounds more like revenge, the opposite of the certainty necessary because it generates fear. In a context such as this, there is no way to expect private investment to materialize.

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Luis Rubio

The Mexico-U.S. border is a peculiar world: part Mexican, part American and, at the same time, different from both. Above all, it is absolutely different from what it is imagined to be by Washington or Mexico City politicians. The border has come to acquire its own character due to its particular circumstances: the disdain of its central governments, the distance to the respective capitals and, most of all, the mutual dependence that each point along the border has developed.  El Paso could not exist without Ciudad Juárez and both reside in the middle of an inhospitable desert that attracts rather than repels them. The challenge, and the opportunity, for Mexico does not lie in going back to isolating the border zone (which is what the current policy seems to be) but instead to integrating it into the country, while the country integrates itself into the border proper.

In a visionary book, La Frontera: The United States Border with Mexico, Weisman and Dusard describe many borders that typify the line that joins (and separates) the two nations: each region possesses its essential qualities, but the two together maintain similarities deriving from the permanent interaction –and the interdependence- arising from an increasingly deepening coexistence. That book, written nearly three decades ago, was a mere hint of what was to come. The book describes, and illustrates with photographs, the changing natural geography, but also the manner in which the communities interact daily on both sides of the border, with all of the issues and tensions forming an inherent part of the panorama.

Were they to publish a sequel today, these authors would surely describe two new realities: first, the colossal increase in border interaction, principally the product of the growing integration of the two economies, the supply chains that sustain the automotive, chemical, electronic and aviation industries and so many others that are the daily bread of the Mexican economy and that have led to a dramatic rise in trucks, freight cars and persons that cross in both directions every day. On the other hand, the description would most likely include the deterioration undergone by the region as a result of the ever increasing criminal activity, the interminable migratory flows that now have swarmed the Mexican side and the stresses, strains, and conflicts that all this entails.

Despite these ills, the region comprises an increasingly “country” in itself, an area in which communities of both sides coexist as units of both sides and that have features in their everyday lives that are radically distinct from the rest of each of the two countries. It is not by chance that whenever fiscal or regulatory changes are brought about (such as the IVA, the value added tax, or money-laundering) exceptions are created for the border zone because there would be no other way of functioning there. Countless Mexicans attend school in the country to the north, or live on “the other side” and cross the border into the States every day. Mexican workers routinely go to the U.S. side, while U.S. businesspeople come to work on the Mexican side.

Some border states have formalized diverse schemes of cooperation to facilitate the exchanges, others simply engage in them. Perhaps there is no better example than that of the Sonora and Arizona border with its bilateral commission. For the state of Texas, Mexico is its largest trading partner, superior in volume and value than that of the remainder of its exchanges with the rest of the U.S. and its governors, both Republicans and Democrats, dedicate themselves to making the relationship work. The U.S. Federal Government itself has been inventing mechanisms to facilitate border life and to attenuate the growing bureaucratic complexity that distinguishes their security programs, through projects such as Sentry, whose purpose is to expedite the border crossing of previously registered motor vehicles.

For Mexico, the border has always been a challenge. The historical instinct has comprised that of distancing ourselves from Americans, tolerating the inevitable peculiarities that are the trait of those living in that region and forgetting the entire matter. It was with that end that, at mid-XX century, the free zone was devised and, later, the establishment of assembly plants was favored, always restricted to that region. That is, they wanted to isolate the border region in quarantine fashion for health reasons: for the rest of the country not to be contaminated.

That perspective is no longer sustainable nor does it make sense. From the eighties, the border has become the key factor between the economies and the meeting point of Mexico with its main economic engine. Of course, there is no reason for Mexico limiting itself to a sole engine but it is impossible, and would be suicidal, to attempt to diminish or eliminate the elements that make the region work.

In a word, instead of once again isolating that zone from the rest of the country through the re-creation of a free zone, the government should integrate it completely into the rest of the country and, simultaneously integrate the country into that zone. This is not a play on words: the only way of being able to prosper is simplifying, decentralizing and (de)bureaucratizing, all these, a trait inherent to that region.

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Luis Rubio

While Mexico sprints toward an uncertain, irreproducible and, certainly undesirable past, the rest of the world runs at a frenzied speed. It is not only the fact of proceeding in reverse, but also that the inherent risks regarding what is destroyed along the way implies that the country will forfeit the possibility of, finally, achieving high economic growth rates. The matter is not one of governmental preferences or popularities; the issue entails strategies of development in the era of globalization, in the XXI century.

No place in the world evidences the direction of the development of this era, and in such brutal fashion, as Asia. In that region, the dispute embodies everything for the future: who will procure the highest rates of per-capita income in the shortest time. One by one, each of those nations, with its culture, history and form of government, has been constructing the foundations of its development, but all these nations share characteristics in common, beginning with their devotion to education, infrastructure and technological development. In that region, it would be unimaginable to attempt to return to an idyllic past because nostalgia has no place in the future and everything hinges upon, at the end of the day, in a better future.

A recent visit to three countries of this region left me with observations and learning experiences on the way they conduct their affairs and, above all, their priorities: the differences among nations such as Korea, Singapore and India are stunning, but the dynamism comprises solely one, common to all. India is an immense nation in population and territory, with an ethnic, religious and economic diversity that, even when one comes from a country as complex as Mexico, is absolutely incomprehensible. And, notwithstanding this, the entire country appears to be imbued with a drive toward a future that, without breaking with its traditions, would be radically distinct from the past.

The first time I visited Korea, in 1998, the country was emerging from a financial crisis, similar to those Mexicans had undergone so many times. What impressed me most on that occasion was the sense virtually of guilt exhibited by my interlocutors in the government and in academia. For them, the fact of having had to resort to external support (the IMF) was equivalent to losing face, demonstrating incompetence and, in the main, having chosen the wrong path. Their response was not to return to the poverty of the past, but to change their strategy in the extreme, confront their problems and take a great leap forward to bring to fruition the results of which their citizens are so proud today.

India and Korea entertain evident similarities with Mexico because they are large nations, with a long and proud history, but where dramatically distinct is in their determination to shatter the ties of the past and build a new society, dissimilar, capable of satisfying the needs of an ambitious and driven population. Korea, a nation without natural resources, opted to convert education into its comparative advantage: instead of yielding to traditions or interest groups, it propelled a fundamental change in education until rendering it the means through which poverty and its natural impediments could be left behind. India, a nation with more than a billion inhabitants, decided on a similar path, but one situated in the environment of the enormous complexity typifying it. Despite its social contrasts, the nation’s full impetus can be appreciated on every block and in every conversation.

A member of the Indian government explained the challenge with a clear and simple argument: in spite of its similarity in size to China, India is a democracy and has to deal with its problems within that context, something that for the Chinese government would be utterly inconceivable. The difference, the functionary went on, is that the Chinese will always continue to be enthusiastic to the extent that the government goes on satisfying them with economic growth; in contrast, India will continue on its road to the future, on occasion jolt by jolt, but with the support of a citizenry that only has the future because the past holds no attraction. On hearing that, I wished this were the discourse of our president.

Singapore is not a model for Mexico (nor for India or Korea), plainly because of its scale. An island-nation where everything works, the infrastructure is unsurpassable and the order excessive, Singapore knows from whence it came and where it wants to go, to which it devotes resources and efforts incessantly and even mercilessly. Nothing obstructs the path of the world’s best-paid civil servants (there the reverse is understood as true:  well-paid functionaries commit themselves to their work and to nothing else), all are specialists consumed with their mandate.

Some decades ago representatives of the World Bank and other analogous organisms affirmed that Mexico had perhaps the more competent governing team; it was without doubt top-notch, but that of Singapore is categorically matchless, one after the other. It is not by chance the world’s wealthiest nation in per capita terms.

Three nations edifying their future: with their vast differences and features, each of these possessing clarity of course and, chiefly, without complicating their lives with a past impossible to recreate. Impossible not to be tremendously envious.

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In memory of Manuel Medina Mora

Luis Rubio

The streets are clean, tourism has exploded, merchants seem happy and hotels are full. Oaxaca seems to have finally broken with its historical impediments and enjoys a new moment of peace and growth. If it only were so easy. The only thing that has changed is that the federal and state governments have given in to all the demands of the so-called Teachers Coordinator, the famous CNTE. Thus, the blockades disappeared, which means that the (alleged) teachers granted the citizenry the favor to live in a normal way, at least until the new round of demands, threats and extortion begins. All of which makes economic growth impossible.

The discussion regarding economic growth is permanent and is enlivened by the political rhetoric that does not address the causes of the phenomenon and that is exacerbated when the growth rate is low. The relevant thing is that the underlying problem never ends up being solved. In the course of the past few decades, various strategies have been undertaken to address the absence of high rates of growth and progress has been made on some levels, but no consensus has even been reached on the ultimate cause of such a low average rate, to the extent that, instead of looking for ways to raise it, what’s celebrated is the fact that there was no recession.

The first big problem to reach a diagnosis that everyone can share is what happened in the seventies, because there lies the heart of the political dispute. In that decade, the economy grew close to 8% annually and that is the memory that critics of the subsequent reforms keep in their memory and therefore always propose to return to that era. Now, with AMLO, they feel the time has come to recover that idyllic moment in history.

There are two problems with that memory: one is that it is false and the other that it is unrepeatable. The false part of it is that it’s impossible to isolate the period in which there was indeed a high growth rate from the consequences that followed, because the fuel that drove that growth was the combination of a rapidly increasing external debt, the expectation of permanently higher oil prices and exacerbated public spending. If one takes not only the seventies but the seventies and eighties together, the photograph ends up being very different: in the eighties the excess of the seventies had to be paid back in the form of a permanent recession and extremely high inflation. That era is unrepeatable because it was a unique moment in which exceptional circumstances combined to produce a pathetic rate of economic growth and ever more social conflict.

Secondly, the problem is not the lack of growth, but the lack of generalized growth: when one visits Querétaro or Aguascalientes, it is immediately evident that the notion of low growth is simply ridiculous; the opposite is true in Oaxaca or Guerrero. So, the problem is not that the growth is low, but that something differentiates the northern states from the southern ones.

Thirdly, the government’s permanent propensity to modify the rules of the game in a country where the president (or the authority in general) has excessive discretionary powers creates an environment of endless distrust. That was the reason why the NAFTA was sought: to create a space in which the rules were permanent and reliable and is a good part of the reason why the North grows so rapidly.

Santiago Levy has long been arguing that the informal economy is the great scourge of the country because it prevents companies from growing and developing and has proposed a series of measures to reduce the tax burden and facilitate their formalization. The approach makes sense, since if one compares the tax collection of those in the formal economy with respect to GDP, the tax burden is not very different from that of the developed world: the problem is clearly in the enormous dimension of the informal economy and the mechanisms that promote it.

The example of Oaxaca suggests another (additional) explanation to the problem of growth. Luis de la Calle summarizes it eloquently: “The prevalence of extortion in the country has become one of the main brakes to the growth of micro and small businesses, many of which are forced not to grow and remain in informality, where extortion tends to be centralized and known. This implies that they do not have an incentive to invest, grow, explore new markets and products, expand outside their local markets and less to hire a growing number of employees… Moreover, the chance of extortion increase with the success of small businesses.”

The reality is that it is not very difficult to elucidate the cause of the economic stagnation, but Mexico is on track, once again, in the wrong direction. The current government is exacerbating uncertainty for investors at a time when NAFTA is at risk and believes that with a great fiscal stimulus everything will change. It would be better to attack the causes of extortion and informality because therein lies the heart of the structural problem that prevents growth. It would also help to strengthen, rather than destroy, the institutions that generate trust, but that would be too much to ask.

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Luis Rubio

The only thing about which there is no dispute is that the president is advancing pell-mell toward a growing concentration of power. Every step he takes and each decision he makes tends to eliminate competition, diminish or neutralize counterweights and cancel all sources of independence that he can. The manifest objective is to control so as to resolve the problems that the country has been experiencing with weak presidencies that proved incapable of reestablishing order and promoting the growth of the economy. In other words, recreating the sixties.

Decades of observing the functioning of the political system have led me to two conclusions on its fundamental pillars, hence on the viability of the project of concentration of power.

In the first place, there is not the least doubt that during the entire independent era of the country there have been only two periods when the economy grew swiftly and the society lived through years of peace and stability.  The first was that of the Presidency of Porfirio Díaz that, after decades of conflicts and uprisings, the government instituted an order that permitted attracting investments, constructing railroads and bestowing a strong drive on the economy. The second was the post-revolutionary stage, especially the years of the so-called “stabilizing development,” during which the economy burgeoned in an unusual manner and the country underwent rapid urbanization and growth of the middle class. The common denominator was a strong government that did not allow dissidence and one that imposed order. It is not difficult to identify in these achievements a powerful attraction for a president who dreams of procuring a third era of peace and stability.

The problem with a nostalgic glance back on the past is that it permits us to isolate the triumphs from the failures or the advances from their consequences. The Porfiriato period collapsed due to biological reasons in that it depended on one individual who pushed and controlled, negotiated and governed, but that inexorably came to a close. Even without a revolution, the Porfiriato endured contradictions that with difficulty would have survived the leader himself. The end of the era of the hard PRI was the product not of the lack of institutionality but rather to its close-mindedness and authoritarianism, which denied any flexibility for adjusting the model when its underpinnings began to take on water, while it simultaneously blinded its leaders to the development of the society, the product, ironically, of its own successful governing. Like in the Porfirio Diaz times, the nature of the system hindered it from transforming itself and there is no reason to think that a new era of iron-fisted presidential control would be distinct. The problems that the PRIsts are currently facing in their intent to re-create themselves derive from precisely this.

In the second place, Mexicans have an innate penchant for wasting opportunities, perhaps because of the shallowness of the Mexican democracy and its profound authoritarian leanings. Although the problem of access to power was (almost) solved, Mexicans are far from having built institutional scaffolding that protects the citizenry, deeply rooting citizen participation in such a diverse and unequal society and obligating the authority to be transparent and accountable for their acts. The mere fact that the president can decisively wipe out the incipient counterbalances with no cost says it all.

But the underlying problem is that power, as vast as it may be, does not guarantee a genial result. In the eighties and nineties, thanks to the pairing of the PRI and the presidency and the authoritarianism inherent in the latter, with an infinitely more powerful presidency than that which followed, the government was unable to carry out the integral change that its own project proposed. Incomplete reforms were made, frequently translating into substantial discomfiture, for which Mexicans are now paying the price. An example illustrates this to a T: Telmex had two title-concession projects for its privatization, one worth four times more than other; one pledged the immediate end of the monopoly and the opening of competition, while the other preserved the monopoly. Economic growth required the first; interest from internal revenue ensured the second. No such thing as a free lunch.

At the beginning of this century, Fox wasted the enormous opportunity that his election had created. To the dilution of presidential power he added the incompetence and frivolity of his person, who has to date been unable to understand his historical responsibility. Will the third –the so called 4T- be the charm?

The problem transcends the characteristics of a person or persons because it reflects the structural weakness of Mexican politics that is not resolved with the reconstruction of the imperial presidency.

AMLO is basking in enormous popular support, greater than Fox at his moment, but equally volatile. If something has been taught by Mexico’s history it is that the great statesmen recognized today were acknowledged as such from having transcended the barriers of the time and constructed a novel platform of reality. None of these -Juárez, Madero, Cárdenas- knew beforehand that they would be statesmen: they simply erected a new future. All of which shows the futility of attempting to recreate an unrepeatable past, when what is required is a new future.

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Luis Rubio

In 2018, the Mexican electorate shed the mask of the establishment’s dominant narrative and chose the candidate that promised to change the ruling axes of the country’s political and economic systems. Since the election, but especially since the congressional swearing-in on September 1, Morena’s groups and allies have acted less like an institutional parliamentary group and more like a clashing force that wants to alter the established order without formal procedures or negotiations. According to their logic, they came to power regardless of the election: rather than winning the election, the election merely acknowledged their victory. In light of this vindictive undercurrent among many members of the Morena coalition, the key question in the months ahead is whether López Obrador will support this idea or whether he will assume the presidency as a statesman who is accountable to the whole of the electorate.

The contrast between both scenarios is radical. The first case presents a government that seeks not only to rule in its own manner but also to change the established order and its sustaining institutions in an integral, drastic, even violent manner. It hearkens back to the days of the Mexican Revolution, where one regime ended and another began without an institutional process in between. In the second case, López Obrador could maintain the existing institutional frameworks in order to carry out his agenda while bringing with him the population at large, as happened in post-Franco Spain. Such an approach has the enormous virtue of making changes permanent.

Spain illustrates the contrast between these ways of proceeding. When Francisco Franco died in 1975, after nearly 40 years in power, the Spanish people wanted a new regime. Politicians wondered how to take that step. One option was to break away from the Franco regime and enter an environment of absolute uncertainty; the alternative was to accept the existing institutional regime—even if it was hated by most political forces and parties—until a new legal and institutional framework had been built. In that regard, the Moncloa Pact of 1978, in which the political parties and the trade unions came together to discuss the management of the post-Franco economy, did not agree on the “what” but on the “how.” The most pressing issue at that time was that of prices and wages, essential to economics but of lesser political importance. Mexico, by contrast, has failed to agree on the “how”: on procedures for governance and economic management. Beyond the specific issues discussed during the pact negotiations, the essential factor in its success was that all relevant and economic forces were there, from the extreme left to the extreme right, business owners to politicians to union leaders. After decades of exclusion, the presence of all these forces—including iconic figures who had been in exile, such as the communist leaders Dolores “La Pasionaria” Ibárruri and Santiago Carrillo—changed the national context. The presence of these stakeholders spoke volumes. During the discussions, Prime Minister Adolfo Suárez proposed that Spain’s political and economic leaders accept the continued existence of the Franco legal establishment until a new constitution could be drafted and implemented. In other words, the process through which the post-Franco Spain would transition to full democracy was agreed. The negotiations did not attempt to make headway on the content of the new constitution, the way in which state companies would be managed, or the process for granting media operating licenses. These affairs would be decided by a future government. The agreement confined itself to handling how the decisions would be made rather than what the decisions would be—and this was the key to its success. With this in mind, López Obrador must determine whether he will take the institutional path—as Suárez did, through which he rose to become one of Spain’s greatest statesman—or the path of radical imposition, typical of a revolutionary project.

In this author’s opinion, López Obrador will soon find that many of his ideas are unfeasible or extraordinarily damaging, and thus are counterproductive to his vision of Mexico’s future. His decision to cancel the new Mexico City airport project is a window through which one can observe his perspective on the potential costs of carrying out actions that have more relevant angles than initially thought. In this case, the airport project cancellation affected not merely a few contractors (for whom López Obrador has assured compensation for the termination of their contracts) but thousands or hundreds of thousands of bondholders in international financial markets, national and foreign providers, and many other kinds of key stakeholders. By closing that door, López Obrador sent a sign that he will not stick by the existing rules, and that no investment can be completely certain. The immediate costs of this decision were apparent in the actions of the credit-rating agencies as well as the effect on Mexico’s exchange rates, but the potentially uncontainable costs will come later, when future investors ponder whether it is worth losing their investments to the actions of an unpredictable government. Unlike contractors and the construction industry, businesses and investors operate a longer-term horizon.

Above all, López Obrador has a fundamental decision to make in terms of how he will act as president: whether to be a social activist or a statesman. If the former is true, the airport decision has set the tone already. If the latter, there is still time to set a new course, as he showed before the Conago (national governors’ conference) when he demonstrated his willingness to work with the governors rather than seek to impose his will on them. For López Obrador, such a change likely would be difficult to make, given his deeply rooted conviction that everything that was done after 1982 was wrong. This conviction is an important factor for his base, which has stayed with him against all odds and often chants “it’s an honor to be with López Obrador!” As a leader, he might well regard such a change, in a way, as the equivalent of betraying himself and the political bases that have supported him through thick and thin. Yet it also may be more important, in López Obrador’s point of view, to achieve his goals than to stick to counterproductive dogmas.

Excerpt from Unmasked: López Obrador and The End of Make-Believe, which can be downloaded at:
https://www.wilsoncenter.org/sites/default/files/mi_190625_unmasked_v2b.pdf

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