Luis Rubio

The year 2018 came early thanks to Peña and Trump, resulting in a lethal combination for the expectations, fears, spirits and, above all, the future, because it appears to pave the way, in inexorable fashion, for the presidency of López Obrador. This apparent causality is seen reflected in the surveys, those that the selfsame AMLO has procured converting, with enormous skill, into a self-fulfilling prophecy. Will it be that easy?

Paraphrasing H. L. Mencken, “For every problem there is a solution which is simple, clean and wrong” and this is not the exception. The argument in favor of AMLO is sustained on five elements: first, ‘we already tried the PRI, we already tried the PAN, the PRI returned and things still don’t work.” Second, only he, a dyed-in-the-wool nationalist, can defend us from Trump; third, there are no credible candidates in the other parties; fourth, that’s what the surveys say; and finally, it’s his turn. The candidate has conducted himself in “presidential” fashion, thus adding to this picture-perfect scenario.

The surveys say many things but, at fifteen months from the elections, these things are scarcely relevant, especially when those who are still undecided are, to a great extent, the largest block of the electorate. With a sole candidate in the panorama, present surveys strengthen all of the biases and serve to manipulate public discussion.

The argument against the PRI lies in that this government has been a failure, its unpopularity makes it impossible for a successor to rise from his ranks, corruption is stifling the country and all of its potential candidates, and in that, despite its promise to be an effective government, once the reforms were passed, it hasn’t got its act together. Were this not enough, in its obsession to remain in power, the government has politicized all of its actions, to the extent of committing suicide in last July’s elections and postponing bringing gasoline prices up to date. Consequently, says the political mantra, there is no way that a PRIist could win.

The argument against the PAN lies in its that its internal disputes annul it, that there is no charismatic candidate capable of enthusing the citizenry and, above all, that it has proven to be, historically, a great opposition party, but one incapable of governing successfully.

In sum, it would seem that next year’s elections are unnecessary in that it is a done deal. I ask myself whether that is in truth so obvious. Beyond the evident avatars of any contest, –the successes and the errors, luck and bad luck, the circumstances at the time (economy, inflation, etc.) and the moods of the voters- it appears to me that it is the PRI that will determine the result of the election and not AMLO.

In the first place, elections with more than two candidates with no runoff always end up being contests of two, a nearly iron law of politics. In this respect, the key question is whether the election will in the end be between PRI and Morena or between Morena and PAN. Ceteris paribus, it seems evident that AMLO will be the “elephant in the living room,” the candidate to beat.

In second place, the essential characteristic of the present point in time is the fragmentation of the electorate. In principle, today all of the parties could win because, in contrast with the past, the electorate no longer entertains permanent loyalties. In addition to that, the appearance of the Independents, –one or many- as non-party candidates for the presidency, adds to the dispersion of the vote as well as to its fragmentation. I am certain that none of the potential independent candidates can win, but all compete for the same segment of the electorate, typically the urban middle classes, precisely the population that AMLO requires to win over beyond his hard base in the center of the country plus some other localities in the states of Guerrero and Michoacán. That is, almost every vote that will go to an Independent is one vote less for AMLO.

To the latter we must add the PRD or, at least, Miguel Ángel Mancera who, as much as he is trying to build a multicolor coalition, the measure of his success will reside in rendering the PRD viable more than in winning the presidency. That is, he divides the vote of the Left. The upshot of all this is that the next President of Mexico will probably be elected by less than 30% of the vote.

In third place, with such a low threshold for victory, the crucial question is how the PRIists will vote because, despite the party’s unpopularity, it continues to command the country’s largest hard vote. Some place this hard vote at around 26% of the electorate, a number not very distant from that necessary to win the election. However, as we were able to observe in     2006, PRIists do not vote in an automatically and guaranteed manner: Roberto Madrazo scarcely procured little more than one half of the hard vote of his party at that moment.

Thus, my reading of the current political reality tells me that the PRI could win the election if it were to field a candidate capable of taking 100% of its rank-and-file members on election day. It seems to me that there are only two or three PRIists who could get that job done. Therefore, if my analysis is correct, the election is in the hands of the PRI and not AMLO. Everything will depend on the candidate postulated and his/her capacity for getting all of the PRIists out to vote on Election Day.

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@lrubiof

Luis Rubio

The deterioration is slow but certain. Difficulties pile up and expectations worsen. The image of the government is systematically impoverished, without anyone being able to turn it around. The political parties and the pre-candidates exploit every chance to kick a man when he’s down, unconcerned about the implications of their actions, whether it be PAN, PRD, Morena or the array of independents: each to his own. Suddenly a ray of light: Trump delivers everyone from their sufferings because he supplies the golden opportunity for a problem -or enemy- in common. The notion of a united front thus acquires cosmic dimensions: we are all migrants, we are all patriots, we are all good. We are everything, but the harsh reality.

Hard times call for unity and, in that, the summons of the President is impeccable. But a summons does not resolve years of cold-shouldering nor does it delegitimize Lopez Obrador’s call to join forces behind him. The falsehood -intemperate and distant- of the calls for unity is evident to the entire citizenship, which has learned the hard way to distinguish the honest from the self-seeking. The impending sword of Damocles hanging over the head of Mexico matters to no one, because the true dispute is about the presidential succession and the conceit of the moment. If proof is needed, even the organizers of last Sunday’s march were unable to reach an agreement on its objective.

The trouble with calls to unity is that they do not spark enthusiasm in anyone when they are against something: the population wants answers and solutions, not mere condemnation; in any case, they might have united in favor of something better. The migrants living in fear in the U.S. and their families in Mexico do not want marches and protests: perhaps they would join a call for the transformation of the country but they are not willing to sacrifice a single minute of their time on a fictitious exercise of togetherness. Worse when the President attempts to jump on the bandwagon to short-circuit his own unpopularity. Needless to add the obvious: however much Trump represents an enormous threat to the status quo, the mainstream Mexican is much angrier at the government; it is not by chance that innumerable organizations that joined the summons to the march opted in the end to drop out. No one wants to be part of a shipwreck: that includes the current government and many of those who saw some possibility in its reforms.

For nearly half a century, Mexicans have lived in the hope of a transformation that would allow it to break with the ties that bind the country to the past. Throughout all of these decades, there were many attempts to reform aspects of the economic and political life of the country, but none endeavored to establish the foundations for a distinct future, for full-fledged entry into the XXI century. The economic reforms created niches, spaces of exception, that have afforded Mexicans extraordinary relief, but not an integral solution; the politico-electoral reforms procured the appeasement of the diverse oppositions, incorporating them into the PRIist system of privileges. Migrants sought jobs because there are no opportunities here.

Decades devoted to caring for the immediate crisis: mere patches and quick fixes: band-aids that help but do not solve anything. A few tweets from Trump were sufficient to lay bare the whole country, evidencing not only our lacks, but also our vulnerabilities. To address that, wrapping ourselves in the flag ends up being just one more act of braggadocio, a mere temper tantrum.

The disgust that the population is experiencing has not come about by chance and is not solved, as the leading candidate in the polls pretends, by a turning back the clock to an an idyllic, easier era. The invitation to a “new national project” is very appealing (and no doubt attracts many desperate business people), but it clashes with the reality of the world we live in. Precedents are many, from Perón to Chávez, who not only destroyed what existed, but forever undermined the future of their nations. Many, starting with Trump, Xi, and Putin, aspire to recreating their old dreams of grandeur but nothing, except for the total destruction of the modern life and communications that characterize it, could change the leading role of public opinion, the social networks and the globalization of expectations in today’s reality.

Mexico certainly needs to change; the question is where to and how. The calls for unity are nothing but the sudden nostalgic or self-interested flare-ups of those continuing to benefit from the old order and desiring to preserve it, which is why they wink at nationalistic and jingoistic overtures.  Nationalism, wrote Orwell, is “power hunger tempered by self-deceit.”

Trump has catapulted us from our comfort zone and obligated us to make a choice: take a step firmly into the XXI century or accept that the deterioration will continue. What there is no doubt about is that, in the absence of change in current trends, the only possible way is down, and all those who abandon ship –some seeing no other option, others believing that joining at the outset can get them a double share of the pie- do nothing other than accelerate the pace. Those who think that things cannot get worse –before the elections and after- do not know history, from the Russian Revolution on, not to speak of the remote past.

Unity among people with different interests dedicated to building the future would be much more useful than a first-row seat on the Titanic.

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@lrubiof

Luis Rubio

It sounds simple: elect me and I’ll fix it all: in the words of Trump, “I alone can fix it.” The so-called Populist seduces for the simple reason that he purposefully distorts the key intuitive element of democracy: that “the people” can govern themselves. The Populist peddles the notion, clearly illusory, that he or she represents the people and, in fact, personifies them. Thus it is that Jan-Werner Müller, author of What Is Populism?, states that “Populism is a permanent shadow on representative democracy.”

Populism has become an easily accessible label but one difficult to spell out. During recent months, diverse European parties and at least two U.S. candidates have been classified under that definition. Some are of the Right, others the Left, but all share a series of common elements. John B. Judis, in The Populist Explosion, affirms that the Populism of the Right (utilizing Trump as an example) proposes that the middle classes are being squeezed out by “others,” who can similarly be “the rich”, foreigners, bureaucrats: that is, “the bad guys”. On its part, the Populism of the Left, where Judis employs Bernie Sanders as a prototype, promotes defending the masses from the plutocratic elites. Both derive from the same thing: the good guys against the bad guys, where a sole individual can solve the problem because he is identified with the population and comprises an integral part of it, the only authentic representative of the people.

The Populist focuses on real problems in order to convert them into a call to action: what matters is not whether he has better ideas or tools to solve the difficulties, but rather creating a sensation of impotence because it is the absence of hope or of a perception of improvement that constitutes Populism’s main breeding grounds. It is also the reason why it is of such great import when Mexico’s president plies terms such as “poor social mood” because, coming from a person in a position of authority, that type of characterization tends to validate itself and become a mantra. Among U.S. elections scholars, there is virtual consensus that Jimmy Carter forfeited the possibility of being re-elected when he attested that Americans were suffering from a “crisis of confidence.” That address, known as the “malaise speech”, changed the expectations of the population and devised a space for the defeat of the then-president.

Populism is not about public policy –of taxes, jobs or business-, nor is it an ideology, but instead it deals with a political logic that appropriates possibilities when grievances rise, when the tone of political discussion is raised and when the discontent of the status quo is heightened. The genius of the Populists lies in their capacity to convert the population’s apprehensions, which contain some element of truth (such as immigration in Brexit), into sustainable electoral platforms. Fundamentally, however, the factor that energizes the Populists is not the economy but the impotence that manifests itself in a thirst for justice. Why is a poor soul sent to jail and not a corrupt governor? Why is a known criminal maintained as a senator or representative while the economy continues without benefits for the majority? Why was no banker imprisoned for the Fobaproa banking scandal?

Populism, says Müller, stands on three feet: negation of the complexity, anti-pluralism and distortion of the system of representation. For the Populist, solutions are straightforward and obvious and his is always the only response possible, that is, there can be no legitimate discussion on the best way to solve the existing problems because only that leader has the solution, which, additionally, he does not have to explain to anyone. In that the Populist represents the popular will, legislative processes are counterproductive. Public life is not a matter of debate but strictly one of morals. We are right and the rest are immoral, with ulterior agendas. Needless to say, the best antidote to Populism rests in transparency: explaining the dilemmas and the complexity to the population as the adults that they are, recognizing the diversity in views of society and that not all conform to the technocratic ideal, and strengthening legislative instances to become the supreme mechanisms of representation more readily than, like now, the instrument of political control by the presidency.

Only a little less than two years are left in the current presidential term and 17 months until the next elections. The primordial issue should be the conclusion of this government under better conditions than the current ones in the best way possible. Although the society will decide with its vote who will govern us during the next six years, it is the present government that has the responsibility of engendering conditions for the option to be real. What it has done to date is exactly the opposite: it has polarized, ignored the population and been lacking in its essential mission, which is to bring about conditions for the prosperity and hope of the population. With its mistakes, the government has promoted uneasiness and impotence. There’s still time to turn things around.

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                                                                                                              Luis Rubio

There are three precepts that no government can ignore: first, there is no alternative but to deal with the person who is the President of the United States of America. We can like it or not, but the superpower exerts an impact out of all proportion on the world and more so on Mexico. In addition, there is nothing that can be done about the matter. The geographic as well as the political, social, economic and geopolitical reality imposes itself above any other consideration. Second, the function of governing depends wholly on the confidence that the government is able to inspire on the part of the citizenry, a phenomenon that is magnified dramatically in this era of social networks. When the European Union was negotiating with Greece a couple of years ago, the head of the euro group said it categorically: “Trust comes on foot, and leaves on horseback.” Finally, the third precept is that it is better to keep the expectations of the population meager, because if everything comes out well the success is enormous, but if it comes out poorly no one will be let down. Alexander Pope, the great English poet of the XVIII century stated this eloquently: “Blessed is he who expects nothing, for he shall never be disappointed.”

During these past months, and in crescendo since Trump was anointed as the presidential candidate, the Mexican Government has been violating the three precepts one by one. Independently of the preferences of the population or the members of the current government, it has never known how to deal with today’s President Trump. The complaints and criticisms in the media and social networks are one thing, but quite another is the government itself, whose responsibility is enormous and cannot be delegated. In the graphics of the surveys of that electoral season it can be appreciated that every time ex-President Fox launched one of his cherry bombs, Trump’s stock went up. The same thing, but to a greater degree, occurred when the Mexican President gave the then-Candidate Trump the same treatment as a Head of State. Today it is clear that President Trump is not going to change or “moderate” his discourse. The key question is to what extent will the real limits of power (whether geopolitical, those stemming from the electoral structure of the US, particularly the Congress, and the system of checks and balances), contain his worst excesses. One of the White House officials when Nixon entered the U.S. Presidency told the journalists of the moment, “Watch what we do, not what we say.” What is said is immense and often intolerable; now we need to see what really is in store.

What is simply not part of the repertoire of President Enrique Peña Nieto and his team is communicating with the population. The government is not interested in informing, explaining or convincing.   His conception of government is that of the PRI of before: command. The problem is that the latter is impossible –as the evolution of this administration has demonstrated- in the era of social networks, the so-called commentocracy and the ubiquity of information. Successful governments are those that inform and that attempt to lead the discussion so that the population comes to understand their rationale and, with luck, makes it its own. Decades ago, the government could control the information that filtered down to the population, but today that is not possible: information not only arises from an infinity of sources –serious or not- but also, the citizenry itself can invent, add to or modify the information and disseminate it with the same swiftness and impact of any government. Trust is key for the functioning of a government, and to an even greater extent when this concerns a government anchored to institutions without the least strength or credibility. Despite this, the administration of President Peña is convinced that it knows more and knows it better than the entire population. In this regard, its recent response to one more failure in dealing with Trump’s government, that of recurring to a coarse nationalism, is pathetic: It’s easy to launch a nationalist tirade; thereafter nobody knows how to stop it or who’ll exploit it.

While it is difficult to govern in these times, what is inexplicable is for the government to fan the flame with no justification whatsoever or, worse yet, without sustenance. Inviting then-Candidate Trump was intrinsically reckless, demonstrating a profound ignorance of the way U.S. politics works or of the risks of that action for Mexico. But nothing explains what took place on January 23rd when the President and his Secretary practically volunteered that they had already solved “the problem.” The following days revealed that the strategy had not changed and that the disposition to incur in huge risks was still alive and well. All governments commit errors: that is an inevitable part of the function; what is inexplicable is the need to fan the flames of expectations, and still worse, when the risks that the society as a whole perceives are extreme.

“Things are not ripe,” affirms a popular saying. The challenge that the new U.S. administration poses is powerful and risky in itself; to this one must add the process of presidential succession here in Mexico, which is at its height, thus everyone is trying to beat a dead horse. There is no reason to rush into a negotiation for which the counterpart is not ready or willing. The Mexican government should be creating conditions so that success can be attained once the other side has exhausted its agenda on other topics and negotiating becomes feasible.

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Luis Rubio

G.K. Chesterton understood Mexico’s dilemma better than anyone: “When a religious precept is shattered it is not merely the vices that are let loose. The vices are, indeed, let loose, and they wander and do damage.  But the virtues are let loose also; and the virtues wander more wildly, and the virtues do more terrible damage.”

Mexico is facing enormous risks on its domestic as well as on its foreign front, both the product, to good measure, of what  Chesterton would have denominated “the shattering of a religious precept,” although in this case it has nothing of the religious: the incapacity and legendary incompetence of the Mexican system of government.

Ayotzinapa, the gasolinazo (the recent steep escalation in gasoline prices) and the poverty –three unconnected examples and radically distinct among themselves- illustrate the failure of the system’s management over the decades, if not centuries. Ayotzinapa sums up the crisis of security, justice and government that characterizes the country; the so-called gasolinazo depicts the ancestral propensity of the government to cut corners, in this case incurring in politicized and deficit-ridden public budgets with the consequent growth of the debt, achieving nothing relevant (except devaluations), although of course, more privileges for an inefficient and most self-engrossed bureaucracy; poverty, that age-old evil, has not been extinguished because petty fiefdoms, corrupt unions and political control are privileged above development and progress.

Certainly, each of these examples emanates from their own particular circumstances, but the common denominator that causes them is an aloof political system, which is not only incapable of solving problems once and for all, but also indifferent to the need to solve them, not to mention achieving integral development.

Nothing better portrays the indisposition to resolve the root cause of our problems than the North American Free Trade Agreement (NAFTA), currently under assault by the new U.S. President. NAFTA has been the economic salvation of the country over the past twenty-odd years, the sole engine of growth that the economy possesses. The threat hanging over the country from without is aggravated by what President Peña Nieto termed the end of the “hen that lays the golden eggs,” oil.

The pending menace concerning NAFTA and the end of the oil era generate huge, and absolutely reasonable, fears, in the society as well as in the government.  The reason is very simple:  because both, each in its own way, have allowed the system -for decades- to avoid addressing the issues and undertaking actions that the nation required to develop itself.

Oil permitted the construction of grandiose works that nobody needed; this substituted for the development of a modern tax system, because it (apparently) generated interminable cash flows that, in addition, could be deflected to private accounts, personal expense accounts and political campaigns. Oil in the hands of Ali Baba enabled years of privileges, explicable enrichments and a sufficient economic impact for everyone to feel satisfied.

NAFTA was the way to go around all of the political system’s vices and inefficiencies. While NAFTA evidently concerned an agreement regarding trade matters and investment, its true transcendence does not reside in the economic per se, but rather in the legal certainty that it conferred on companies and investors to risk their capital in Mexico.

Viewed from a cynical perspective, NAFTA was (yet another) way of sidestepping the internal problems that engendered (and that continue to engender) legal, fiscal and patrimonial uncertainty among Mexicans. Instead of solving these problems, the government opted for creating a regimé d’exception in which foreign investors could trust. That is the grounds for why NAFTA is the sole engine of growth: as could be seen in 2009, when exports fell due to the collapse of import demand by the U.S. economy, without the demand for imports by the U.S. economy, the whole Mexican economy came down (a recession three times as great as America’s).  The solution is not more public expenditure as the Peña government attempted following the grand tradition started in 1970, but a political and legal regime that citizens can trust.

The uncertainty of today is perfectly logical, but it is home-bred: it is the product of everything that has not been done to build a modern nation, free of its predatory bureaucracy. Instead, one government after the other has preferred exceptional actions which, as the old joke goes, privileged “technical” solutions (like the Virgin of Guadalupe) rather than “religious” like a new political system at the service of the citizen.

Like so many other times in the last fifty years, Mexico finds itself vis-à-vis the eternal dilemma of trying to take the bull by the horns or close the gate to the corral once and for all. It is evident that it is indispensable to negotiate a broad agreement with the U.S. after which all technical issues (like trade and security, and others that become necessary) would be derived, but none of this will avoid the next crisis if we do not begin to transform the political system for it to be able to respond to the demands of the citizenry, block bureaucratic excesses and obligate the building of working checks and balances.

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@lrubiof

                                                                                                                                    Luis Rubio

Trump is the President of the United States and now reality sets in. Although his inaugural speech contained clear elements of what he expects to accomplish, at this moment everything remains on the plane of expectations and possibilities. As Spinoza wrote in the XVII century, “in practical life we are compelled to follow what is most probable; in speculative thought, we are compelled to follow truth.” What will be the truth?

I have observed Trump since he emerged as the Republican candidate for the U.S. presidency and, attempting to be objective, I have analyzed his proposals, his context and his array of possibilities to determine what part he believes and what part is merely rhetoric but, above all, what is possible in the real world in terms of what concerns Mexico. My impression, reduced to a sentence, is that, despite his being given to categorical and incendiary phrases in his discourse -and daily Tweets-, the new President is (as would be presumed of a businessman) hyper pragmatic, with few fixed beliefs or convictions (such as for example, Obama clearly has them, and Reagan, with whom he is frequently compared, also had them) and that consequently, he will be moved by trial and error. It is possible that, for this reason, he would commit great errors at the beginning that he would correct later. If this were to be true, the key (or the luck factor) will lie in not being in the line of fire while he makes these great mistakes…

Moving from the general to the specific, his proposal is one of retrenchment, which implies reorganization, rationalization and reconsideration. Although with a very distinct rhetoric, this does not constitute a break with Obama but, instead, continuation by other means. In foreign policy terms, Obama initiated the process of military retrenchment in the Middle East and, in the migratory domain he deported nearly three million persons in the course of his administration. Trump will surely make much more noise about these matters, but the substance will probably be more similar than distinct. The only theme on which Trump and Obama differ radically is in commercial affairs: for Obama trade is part of the solution while for Trump it is part of the problem.

Trump’s core proposal resides in the reconstruction (or re-creation) of U.S. economic strength. For him, the current weakness of his country derives from the excesses of its foreign policy during the last decades, above all on the military stage, as well as the relocating of manufacturing plants to other countries and the growth of imports. All this has translated into the loss of manufacturing jobs and the impoverishment of the U.S middle class. Albeit each of these proposals could be disarmed with analytical arguments, such as in fact occurred, sufficient voters accepted his perspective, conferring on him the electoral win.

In this context, it is obvious what Trump would do if the U.S. could abstract itself from the world. However, what the new President proposes is much harder to do because it involves the world superpower that, as happened with Rome or England in their time, greatly benefits from the world order and the status quo. In the ambit of trade, Trump intends to reorganize the existing commercial arrangements and agreements to favor U.S. producers and workers; this sounds good in electoral rhetoric but is formidable to achieve in a world in which the capacity to produce -and, thus, to consume- depends on increasingly structured and competitive supply chains. For instance, there is practically no longer a sole automobile manufactured in North America that does not incorporate parts, components and productive processes that originate in the three countries: infringing upon that would imply raising the cost of cars and reducing the competitivity of those companies before their Asian and European rivals.

My impression is that Trump is going to emphasize the dismantling of regulations and elements that render the functioning of enterprises costly, including important changes in tax issues, in addition to launching an aggressive program in matters of infrastructure (whose financing will comprise a entire theme in itself), but it will be in that sphere of influence that his impact will be greatest. Along the way, he will have ceded political and social affairs to his vice-president, which will appease his party’s conservative wing.

How will this affect Mexico? I see two scenarios: one is that the era of functional friendship that was inaugurated back in 1988 and that allowed the two nations to view each other as inextricably linked -where both share problems and opportunities and do not judge each other but rather cooperate-, will come to an end. That is the risk entailed by the extremism that Trump exhibited in his campaign. The other scenario is that he ends up recognizing what in their time Salinas and Bush Sr. understood: that there is no alternative other than close cooperation and, thus, that the wager should be to improve the relationship and the neighborhood rather than persevering in the historical enmity that had prevailed back when. In this scenario, the negotiations that come to take place would in the last analysis renovate the alliance. The question, not an idle one, is whether Mexico´s government will know how to conduct itself within the new context to achieve this.

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Luis Rubio

Is Mexico a democracy or an autocracy? The response would seem obvious, but it is not. Without doubt, Mexico has changed radically in its forms, but I ask myself whether in reality it has changed in essence. The evidence of the past couple of weeks is not endearing…

The crucial question is why have the fruits expected from the reforms undertaken not blossomed forth along the last half century? The express objective of the reforms initiated since the eighties was to raise the economy’s growth rate, which were followed by an entire series of social and political reforms, some planned and others not. The Mexico of today is unrecognizable, at least in its formal institutional structure; the Constitution of today reflects a diverse country, open and complex, something radically distinct from that which existed in 1917.

The reforms have proliferated, but the growth has not been achieved and that, with the evidence of mounting corruption, is what has induced the population to protest. The anger is real and could easily become the tipping point producing unraveling the stability that, until now, has been maintained despite so many ups and downs.  Of course there are parts of the country that grow at Asiatic rates, but others contract constantly and systematically; despite that, the evidence suggests that the population understand the dilemmas, now magnified by the coming of Trump. What it does not tolerate is the inequities.

The evidence of inequity is ubiquitous. Privileges persist and the protection mechanisms that the political parties, legislators and politicians enjoy are unintelligible for a population that has withstood everything. Even worse, the governors abstract themselves from the general situation to demand ever higher budgets; the federal government promises to return to macro stability but expenditures keep growing; legislators demand salary increases and gasoline vouchers. The former Federal District persists in its constitutional exercise adding ever more rights, benefits and governmental powers, without any obligations, except for the average citizen that is who, at the end of the day, pays the bills.

I have no doubt that the core problem is but one and a very simple one:   the absence of citizen confidence. Confidence is always the key, but it was simpler to achieve this in the PRIist regime because the existence of vertical controls permitted the alignment of governmental actions in a world era characterized by the total control of information. This combination favored economic functionality.

The world changed, the controls broke down, information became ubiquitous and now no one can impose confidence. In this manner, the citizenry’s confidence disappeared and now the government seems bent in undermining it ever more. Dozens, if not hundreds, of reforms have been approved, but none is oriented toward protecting the citizen, conferring certainty on him or guaranteeing him his rights in the face of trouncing by the politicians and the risk inherent in a change of guard in the presidency. The electoral reforms are particularly revealing: they only see to the problems of the politicians; none focuses on winning over the credibility of the citizenry.

In the literature on political transitions* two key moments are established: one from authoritarianism and the other toward democracy. Mexico concluded the first stage and for this electoral reforms were fundamental, but it lost itself in the subsequent process.  Currently there are professionally managed elections that are an example to the world, alternation of parties in government is frequent and freedoms are infinitely greater. However, we continue to endure autocratic forms in issues of transparency, accountability and corruption: much is reformed but always to take care of symptoms, leaving whoever is in command (because to govern remains only an aspiration) to decide what is to be known and whom to prosecute. The grandiloquently named “National Anticorruption System” will be yet another large bureaucracy: would it not be better to eliminate the causes and sources of corruption?

I daresay that we are at a political (certainly not economic) point in time that is not very distinct from that of 1982: the country is experiencing growing deterioration that is manifested in ideological atrophy; economic erosion in vast regions of the country; endemic corruption; and political dissent –in addition to conflict- among the political elites, each looking for ways out to ensure his or her personal survival. All of that is exhibited in the form of profound anger and uncontainable contempt for the government.

What is paradoxical is that, in contrast with 1982, Mexico today has a highly powerful economic platform, the productivity attained by the modern manufacturing plant is comparable with that of the best of the world and workers’ salaries in that segment of the economy are robust and on the rise. The president had the exceptional opportunity to convoke the population in an exercise of national unity before the challenge posed by Trump, but squandered it in the gasoline decision that was poorly planned and even worse communicated, and not recognizing the social and political context of today.

NAFTA was successful because it protected –isolated- investors from the potential abuse and excesses of our revered government and its bureaucracy. Something similar will have to be achieved internally to confer certainty upon the population and thus to begin to recover the lost confidence. In this era it is impossible to prosper without the citizenship on board, which is exactly what the government seems incapable of understanding.

*above all O’Donnell and Schmitter.

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                                                                                       Luis Rubio

The word “democracy” has ended up being trivialized in political discourse, but above all among the population. Many of those who despised the old overbearing presidency and devoted themselves to combating it now despise democracy: before because a person had too much power, now because the person does not have enough. In its most fundamental meaning, democracy exists to protect the citizen from abuse from the government; in the Mexican public debate, democracy is an instrument to elect those who will govern and not to meddle later in their decisions.

What is the appropriate balance here? In the context of an astoundingly poor political management of the gasoline crisis and in the threshold of the crucial year of the political cycle, where the terms of the presidential elections will be defined, it is necessary to debate why the country does not progress despite so many changes and reforms in all orders. Only then will it be possible to get out from such a dangerous political moment.

It appears that there are two issues that no one would dispute as being core problems: the ineffective nature of the government and the worst possible quality of public services. Although the two are linked, they are two distinct issues that are frequently mixed or visualized together in terms of causality: the government does not work (and provides bad services) because it is poorly organized. Of course, there is something of the truth in this relationship, but it is imperative to understand the causes well because an error in diagnosis always leads to a bad solution.

Since at least 1958, when opposition parties got representation in Congress without having won an election but in order to have them inside the tent, the country has undergone a multiplicity of political and electoral reforms that, even in the best light, did not achieve more than partial results, though they did incorporate all political forces into the system. Certainly, some reforms transformed the system for good (such as that of 96 that created an exemplary professional electoral system), but the country continues to stagnate. The reforms attacked –in some cases ad nauseam and to the absurd- problems among politicians, but none has procured listening to the citizenry and responding to their concerns and needs. Most reforms have ended dealing with the redistribution of power among those who are already in power.

As Einstein once said, it is insane to do the same thing over and over, expecting different results. What makes the politicians think that a new wrinkle will solve the political problem of the country?

I do not dispute the need to reform: what I ask is a reform for whom? Dozens of political and electoral reforms –in addition to hundreds of reforms in the economy, tax matters and social rights- have not achieved increasing the trust of the citizenry in their government, that the streets are well paved or that the population enjoys physical and legal safety.

When one asks oneself why the economy does not grow faster, the response is obvious to the citizens, so obvious that the politicians do not want to see it: because there is not the least amount of confidence in the functioning of the government. The system of government is designed to extract rents from the citizenry, feed the philanthropic ogre and preserve the privileges of groups within the political system and those around it. In the meanwhile, the citizenry lives in a world of uncertainty with respect to its physical integrity, patrimonial security and governmental abuse. Even paying taxes is complicated.

The old political system, that of Plutarco Elías Calles, was created to concentrate the power and to institutionalize the conflict of the post-Revolutionary era. The problems of today are in a certain sense the product of the success of that framework, as reflected in population growth, the geographic dispersion and the economic, political and social diversity of the country. Although much has changed thanks to the reforms undertaken, the old system continues to be there, like Monterroso’s dinosaur, but with an enormous difference: before it worked and satisfied the minimal necessities and today it does not.

One possible explanation for this paradox is that the old system responded to the problem of its moment and stopped doing so because the problems changed but the system remained.    Today the system does not respond to the needs of the development of the country that, basically, have nothing to do with what worries the politicians. While they continue the search for band-aid remedies that do not work, the country needs a government that does work. Of course, it is imperative to reform the political system for the government to work, but what is crucial is for the reform that is undertaken to be contemplated with that rationale: that is, that of solving the population’s problems and making their daily lives easier.

The problem with this solution is that it would entail a revolution in the nation’s political system. The most advanced of the proposals of reform seek to return to what formerly appeared to function, that is, in essence, what the current government attempted: to recentralize the power.  That option disappeared the day that the economy was liberalized (1980’s) and it is impossible for it to recreate itself. What we need is a political system for the XXI century, not the continuation, albeit institutionalized, of the Porfirian state. And that implies the end of privileges, and the advent of transparency and accountability: that is, responding to the citizenry. If things do not start out from that premise, nothing will change.

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Luis Rubio

In his book The Big Short: Inside the Doomsday Machine, recently dramatized in the film of the same name, Michael Lewis describes a complex problem in an easily understandable manner. The 2008 collapse of the financial markets constituted the end of years of development of products increasingly more complex and dependent on variables that, their creators supposed, were not connected. When reality imposed itself, the result was that what under normal conditions was not linked was indeed correlated under critical conditions, magnifying the risk. The problem is that Lewis solely details, with immense grace, the symptoms; he never arrives at its ultimate causes.

The succession of events leading to the collapse, and the instruments involved, is known; however, what this and other books tend to omit is the reason for which those “infernal” instruments were designed. Decades of observing several of the most brilliant actors of the international financial sector have convinced me of two things: their extraordinary intelligence and inventiveness, on the one hand, and their conduct, neatly Pavlovian, on the other. This has to do with a combination that can be extraordinarily beneficial for economic development, but also lethal under certain circumstances. In the language of the economists, when the incentives are misaligned, the risk of mixing intelligence and creativity with perverse objectives can bring forth mammoth crises, such as that of 2008.

The heart of the matter does not lie in the facts themselves, widely recognized at present, but in the circumstances that ushered them in. What was it that prompted the development of such clearly risky products? What we all do know is that the crisis was produced because loans were granted, above all mortgages, which the banks that had supplied them later “securitized” and then resold far and wide. Under normal conditions, the families that had obtained these credits would have paid them off over decades, generating the funds for the proper functioning of the system, and the holders of the securities grounded on those properties would have earned the agreed-upon return. The problem was that many of the families awarded the credit, as ridiculed by Lewis’ book and film, abandoned their mortgaged houses, severing the virtuous circle. What Lewis never provides is an explanation for what brought about the granting of loans to persons plainly without the ability to pay.

Mervyn King,an ex-Governor of the Bank of England, describes the other side of the phenomenon:instead of heroic and self-justifying scenes, typical of this types of books (like Ben Bernanke’s, Chairman of the Federal Reserve System’s Board of Governors at crucial moments), King approaches the transcendental: what occurred for the financial sector to become the Achilles heel of the world economy?

The title of Mervyn King’s book says a lot: The End of Alchemy. King dissects the riddle at the crux of the financial system from ancient times: the fallacy residing in accepting deposits from the public whose payment can be exacted at any time vs. the granting of long-term credit. This, of course, is nothing new: it is the lifeblood of the financial system. King takes it upon himself to spell out the way that bankers have devised complex mechanisms that do not ensure sufficient funds in case of an excessive short-term demand and the risks inherent in those mechanisms.

The deeper issue, argues King, is the innate risk of a financial system that confronts increasingly intricate problems and challenges to financial stability vis-à-vis the operators of the system, gifted individuals without the least incentive to be cautious or to safeguard the stability of the system. That is, King, as an ex-Governor of one of the most important central banks in the world, sees the problem that appears when the incentives are in misalignment from a regulator’s perspective.

At the core of the collapse of 2008 is found political pressure that the financiers dealt with in a highly creative manner but that was at the same time scandalous and riddled with vices. The politicians, especially a U.S. Senator and a Congressperson, had for years pressured the banks to lend money to poor families to purchase a home. Canny, the financiers designed a type of mortgage that entailed minimal payments and no interest charges for three or four years, with these payments to skyrocket dramatically at a later date. Those given credit lived in the houses as long as payment was feasible and abandoned them immediately afterward: utterly rational actors. On their part, the financiers had satisfied the political requisite, securing their bonuses (for allocating many, very profitable, credits), allowing the deluge to come some years afterward. By then all those mortgages had been sold to investors duped into buying them up.

Enormous creativity and enormous risk. As King observes, the phenomenon is perfectly explainable and highly difficult to eradicate because political demands clash with the incentives of very smart and rational financial operators. These are conflicts that never get resolved cut can be mitigated with adequate regulation that stems from the recognition of human nature as it is and not as it might be desirable.

Agustin Cartens, Mexico’s central bank governor, has just been appointed head of the Bank of International Settlements, the most important global regulator in banking matters. His experience and intelligence may well help avert the next crisis. Not a minor source of recognition.

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Luis Rubio

The beautiful thing about libraries, about books, is that they are like cherries. You finish one, and this leads to others, which end up leading you inevitably.

Arturo Pérez Reverte

In 2012, very much in his style, Charles Murray published a provocation that turned out to be predictive of Trump’s victory. In Coming Apart, he devotes himself to analyzing a theme that had concerned him for many years: that of the inequality and public policies that tend to exacerbate it. In previous publications he had looked down upon tedious and politically incorrect terrains such as that of intelligence and the IQ as significant factors in social polarization. In Coming Apart he describes this as the population tending to polarize itself and to aggravate the problem: according to Murray, those that are successful in society have come to concentrate themselves geographically and with respect to activities, to the degree that they eventually live in a bubble that separates them from the rest of society: they watch different television programs, read different literature, go to other schools and are increasingly less similar to the remainder of the population. Murray’s argument throughout his career has been that public policies designed to wage war on poverty and reduce social gaps have been a failure because they do not strike at the heart of the problem and often exacerbate it. In 2016 he published an interactive questionnaire that allows to determine how close a person is to the median American, that is, how similar an individual is to the majority. Although the questionnaire is ethnocentric and not easily applicable to Mexico, it is worthwhile responding to because it is highly instructive: http://www.pbs.org/newshour/rundown/white-educated-and-wealthy-congratulations-you-live-in-a-bubble/

Ronald W. Dworkin is a physician and philosopher who has made inroads into matters of public policy, first those related with health and recently with a book entitled How Karl Marx Can Save American Capitalism.Dworkin’s premise is not new, but it is highly interesting: Marx was an enemy of capitalism but, on exhibiting its defects and limitations, he forced governments to respond, above all in issues such as the abuse of workers and the need for social policies, as well as an integral heath system. At present, says Dworkin, there are new risks that, although distinct in nature from those that capitalism underwent in the XIX century, constitute a new challenge to its survival. Among these, Dworkin cites matters such as social alienation, decreasing birth rates, and the use of drugs for functioning in work life. While the concrete proposals that Dworkin suggests have nothing to do with Marx, what seems relevant to me about this book is its notion that liberal and conservative dogmatisms are useless for solving the problems of today. Specifically, he proposes that the government focus itself, with laser-like precision, on threats to private life without attempting against the factors that permit the good functioning of a market economy.

Anthony de Jasay is a Hungarian economist and philosopher who migrated to Australia and now lives in France. His book, The State, begins with an extraordinary question:  What would you do if you were the State? It is customary, says Jasay, to conceive of the State as an instrument, a means that exists to achieve the common good. However, the author asks, What if we were to suppose that the State has its own ends that are not those of the population? Jasay formulates a lengthy response that follows the history of the State from its original function, with exceedingly modest dimensions, as protector of life and property, until it converts itself into the “agile seducer of democratic majorities, to the welfare-dispensing drudge that it is in many countries today”; he then asks “Is the rational next step a totalitarian enhancement of its power?” The State presents a debatable extrapolation but not an irrelevant or illogical one.

Richard Epstein is a U.S law professor who has been writing for decades on the Constitution of his country. This year he published his masterpiece, The Classical Liberal Constitution, in which he delves into the origin and nature of the United States Constitution and analyzes the manner in which it has evolved over time. Beyond the properly U.S. debates that he treats throughout the book, what appears unsurpassable to me are his reflections on how the nature of the government has been changing, its objectives and the values that, in fact, give it life. Its main proposal is that protections of individual rights have been reduced without solving the essential problems of contemporary society. A profound believer in small and demarcated government, Epstein touches upon many of the themes that invigorate the work of Murray but from a constitutional perspective. His central assertion is that only firm and decided protection of individual rights before the State, guaranteed by the Supreme Court, can create the conditions for economic revitalization. Somewhat in contrast with Murray, his contention is not ideological but rather fundamentally pragmatic: it seems obvious to him that the status quo, while it worked before, does not now. That, notes Epstein, should be enough of a lesson.

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