Luis Rubio

“Spain has been without a government for months and its economy improves every day”. So begins an analysis* on the Spanish situation. The description is extraordinary and enlightening, above all because it contrasts two distinct visions of what makes a country and its economy work. Although the Spanish politicians have not come to an agreement for assembling a coalition government (which has obliged the holding of new elections), the country is functioning normally. From the Mexican perspective, this is amazing, as the impasse after the 2006 election illustrated; after living through such sensitive and distraught moments in 1982, 1988, 1995 and 2006, times when political uncertainty reached formerly unimaginable levels, can one conceive of what would happen if Mexicans were suddenly deprived of a government, without a clear authority figure? Even though it might appear absurd, the country was paralyzed at each of these moments because there was no clarity with respect to the future: the ambivalence about who would govern or whether the country would emerge from those most fateful moments incapacitated the society, the politics and the economy. None of that is occurring in Spain and that contrast led me reflect on Mexico’s own reality: it is plain to me that what differentiates us from Spain is exactly the difference between government and bureaucracy.

One measure of development is the quality of the government, not measured in terms of the elected political leaders, but precisely the opposite: the bureaucracy that makes the government function from day to day, independently of the politico-legislative decision-making processes. Rather, what in civilized countries makes the government work is the professional bureaucracy that is charged with cleaning the streets, the workings of the justice system, the police who provide security and, in general, the entire civil service that makes life flow without this being noticed. Under this leveling rod, Spain is similar to any of the developed countries that function independently of the individual -person or party- who governs.

The difference between government and bureaucracy permits a nation to maintain its stability and to function normally independently of the political disputes. Anyone who has observed the way that Europeans or Americans behave at times of crisis can attest to that no one imagines basic government-provided services will stop working, as takes place repeatedly in Mexico at exceedingly fragile moments like those noted previously. In those countries, while the government establishes goals, criteria and regulations, the bureaucracy is responsible for implementation of the latter in a professional and non-partisan manner. The extreme is the U.K., where the sole personage who changes when a new government takes office is the respective Secretary, to whom the highest ranking public servant reports. Within the ministries there are no political appointments: all are professionals. Something similar happens in Spain. That is what allows the government to function even at times of uncertainty such as that which the Iberian nation has been experiencing in the past several months.

The contrast with Mexico could scarcely be greater. Here everything changes every time a new president assumes command. Instead of a professional and efficient bureaucracy, each change of government entails the reinvention of the wheel and the onslaught of new cadre of public officials whose credentials have nothing to do with their skills but with their friendships and political relations. This extends extra muros: the phenomenon is reproduced at every level of government, whether a unit head or a Secretary; everything changes. Team members in the government work for their boss, not for the citizenry. That explains why we practically never have an expert person in public posts, at least knowledgeable in what concerns their nominal function.  Many are masters in politics and camaraderie, and they adapt to any situation; however, none views the citizen as their raison d’être nor even less so the government as responsible for the normal playing out of daily life, without a fuss.

The absence, for months, of a governing coalition in Spain has revealed something else: not only does the economy function well, but also it could work much better if the agents who operate therein –entrepreneurs, workers, bankers, etc.- were less subject to the infinity of requisites, regulations and requirements that are only explained when a government wishes to make it appear that it does indeed, well, govern. In the article cited below, the author compares the performance of England and Germany after the Second World War: while the German economy underwent an exceptional boom, the English economy –all regulated and planned- barely grew. The finding is not surprising: what a country requires is a professional bureaucracy that keeps the boat afloat and it is not in need of a government that limits its capacity to develop.

In Mexico that difference is non-nexistent. While in Spain, despite the stream of regulations, above all labor, which persist, the economy works better without the government than with it. That is something that the politicians, especially those of the Spanish Podemos Party and their grand plans of real or virtual nationalization, surely did not imagine or calculate. The lesson for us is, unfortunately, very distinct: Mexico urgently requires something that does not appear on the agenda of any party: a professional, efficient and competent bureaucracy.

*Bartholomew, James, Who needs governments? The Spectator, April 28, 2016

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Luis Rubio

In his book A Rage for Order, Robert Worth analyzes and describes how the so-called Arab Spring came about: the great expectations with which it was launched, the forces that later took control, the violence that broke out, the divisions that proliferated and, later, the collapse, different in each case, but nearly always disastrous. The final panorama is one of desolation but, above all, of the furious search for mainstays of order for people to survive. The dearth of order, the uncertainty and the violence ended up devouring everything, to the degree that, as Maslow would have said, people returned to the most elemental.

The great question for the Mexico of today is how to change, how to transform the country without ending up in the type of chaos, or authoritarianism, in which that revolution concluded. An analysis of this nature can easily lead to withdrawal: “let sleeping dogs lie”. But analysis is necessary to understand what needs to change and how to achieve this in the best manner. The issue of corruption is particularly important on this plane.

In recent months, the pressure to act on matters of corruption has been on the rise and from the most diverse trenches action has been demanded on the part of the legislative power; President Peña himself proposed the “national anti-corruption system.” The activists have been mounting attacks in all of the forums, but the resistance to any change that was evidenced in the Mexican Senate at the end of April made it apparent that this touches an extraordinarily raw nerve. There activists clashed with the real political powers and… nothing happened. The pertinent query is whether the strategy followed to date to attack the corruption problem is the adequate one with regard to being susceptible to modifying the reality, because that is, at the end of the day, the only thing that is relevant.

In developed countries, the law and the institutions function due to the combination of two factors: a basic agreement on the reign of the law, and the existence of effective mechanisms for enforcement of the laws. It is the adherence to that set of principles- the carrot and the stick- which makes the society work. Mexico never had the equivalent and, however many tons of laws we possess, there is no such very fundamental combination of basic agreement and compliance.

Mexico achieved its stability in the XX century by means of the PRIist order, whose essence consisted of the exchange of discipline and loyalty to the system for the promise of access to power and corruption. These factors, promise and access, lent coherence and viability to the political system. In this fashion, the glue that held the post revolutionary political system together was that interchange, in which corruption played a primordial role in the stability of the country.

For some time, that era’s vast authoritarian structures were highly effective in enforcing loyalties and peace; nonetheless, the country’s successful performance over time eroded those strengths until the structures caved in. From this perspective, the electoral reform of 1996 is supremely revealing because instead of changing the reality of the power, it incorporated the two largest political opposition parties into the system of privileges and corruption. That is, it preserved the old system and its instrument of cohesion (corruption), now including the opposition elements. It is not that the system was liberalized, but solely broadened the spectrum -and the beneficiaries- of corruption.

Observing the scenario thus, the point-at-issue is how to do away with corruption without leading to the collapse of the political system. In other words, how and with what to replace the stabilizing function that corruption represents as the cement that holds everything together, even more so as stability is ever less held by cement than by common pins. Eliminating corruption overnight, assuming that were possible, without replacing its stabilizing function could easily lead to outbreaks of instability and violence. By the same token, preserving the system of institutionalized corruption would only continue eroding any sense of order and eliminating what little remains of the system’s legitimacy. More than doing away with corruption, the key lies in how to substitute its function through institutional processes; phrased another way: adding and developing supporters rather than confronting all the political class.

If corruption is not merely an enrichment process by those who wield political power and/or control crucial hinges in decision-making for the allocation of public projects, but a mechanism of political stabilization, the solution cannot be found in a pure and simple, unilateral confession of guilt (through publicizing tax and patrimonial statements) because that would eliminate the incentive for maintaining loyalty to the system. Of course, it is evident that corruption transcends by far the hypothetically required levels for a political actor to maintain his or her allegiance; nevertheless, no one knows what those limits are; thus, without a mechanism of substitution, only those who have accumulated prodigious fortunes would be susceptible, in theory, to accepting a systemic change.

I do not have the solution to this riddle, but it is obvious that the new exchange would have to embrace the following: drawing a line in the sand regarding the past (with some relatively nominal payment for past corruption); it would cover all Mexicans (not only politicians) and be accompanied by a permanent and credible prosecution mechanism even for the most minimal violation heretofore. The alternative might well be a return to the insurgencies of yesteryear.

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Luis Rubio

According to an old Chinese proverb, three things never return: the arrow launched, the word pronounced and lost opportunity. The history of Mexico in the last decades is, in good measure, that of the clash between excessive promises and irrepressible expectations. But still worse have been the opportunities lost or, perhaps even more seriously, the opportunities wasted. The combination explains to a large extent the prevailing distrust, the mercurialness of the perceptions and how difficult it has been for the governments of recent decades to achieve and maintain the population’s credibility.

Of greatest impact is the clash between realities and perceptions. Mexico has changed radically over the past decades. It has gone from being a debt-ridden and introverted economy, an economy engrossed in itself, to globalization with an immense creative and productive capacity, converting it into one of the manufacturing powers of the XXI century. In politics, Mexico progressed from an authoritarian and totally obscure system to an incipient democracy and one with problems, but one that elects its governors (distant as they may be), exposes the abuse, the violence and the corruption. The mix is certainly not optimal and the result to date is imperfect because it has not reached its core objective, overall development, in addition to that it has left in its wake innumerable mistakes, sizeable differences in incomes, persistent vices and incomplete (or untouched) processes. Despite that, the reality is infinitely better than it was thirty years ago.

The advance in the country in these decades is undeniable and the improvement palpable (and measurable); however, the collective spirit is negative, if not catastrophic. I would daresay that the explanation for these contrasts does not lie in what has been done, but above all in the enormous opportunities that have been squandered. Nirvana has been promised but, when the time comes, one only approaches the pearly gates but that ends up not being enough. Of course we’re not in paradise, but for want of a better metaphor: the objective reality of all of these decades is infinitely better than the perceptions. The question is why the distance is so vast.

NAFTA is an example of successes as well as insufficiencies. NAFTA has been the envy of the whole world from when it was negotiated because it has permitted investment to multiply, exports to rise, high-productivity jobs to be created and the balance of payments to be consolidated. NAFTA has acquired all of this for Mexico, although not for all of the population nor for the whole economy: thanks to the lack of suitable strategies for integrating the entire economy into this circle of accomplishment, NAFTA, however transcendental, has not lived up to its full potential for the totality of the country. Despite its huge benefits, NAFTA continues to comprise a misspent opportunity for a large number of Mexicans.

Fox obtained what seemed impossible on winning a victory over the official party that held a virtual monopoly of power, but as soon as he arrived at Los Pinos he slept on his laurels, took no heed of the reason for his success, and threw away the opportunity to create a new political platform and one of economic growth. Fox did not do harm to the country (a milestone in itself), but he did not make the moment that he himself generated his own. Another clash of promises and expectations.

The government of President Peña promoted a package of extraordinarily ambitious reforms but this came to a halt when implementation costs began to pile up.  As with NAFTA, the reforms, at least some of them, will bear fruit over the course of time, but the false moves have taken their toll: the promise of the effective government was finally, only a promise. Another contribution to the clash of expectations.

Those three examples illustrate our way of being: it’s not that Mexico doesn’t advance, but rather that it tends to take two steps forward and later, one step back. The progress is tangible and real, but the perception is in the last analysis the opposite, above all because the governments oversell the advances so excessively that it is never possible to attain what is promised. The population winds up quantifying what was not done instead of recognizing how much was in effect advanced.

NAFTA is the pillar and engine of the Mexican economy; without NAFTA Mexico would be the same as our neighbors in the southern hemisphere.    Fox did not change the country, but the triumph over the PRI shattered the power monopoly, severed the PRI from the presidency and, with that, impeded the possibility of the type of control and centralization at the heart of the authoritarianism of old from returning.  Reforms such as that of energy and, potentially, the educative reform, are likely to transform the country radically. In a word, the country is much better today than thirty years ago. What is not better is the system of government that we have, which engenders, as it does that clash of opportunities and expectations.

The cause of so many lost opportunities resides in the distance, to date insurmountable, between the politicians and the citizenry. Mexican governors –of all the parties- enjoy formidable protections that allow them to promise something without ever having to deliver. Worse yet, they do not feel obliged to even offer explanations for their poor performance.

A better political arrangement would address these conundrums. What is paradoxical –inexplicable- is that our governors prefer opprobrium than attempting to bring about a new order or, at least to recognize that the existing one doesn’t work. As with the Chinese proverb, they prefer the arrow launched, the work pronounced and the lost opportunity.

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a quick-translation of this article can be found at www.cidac.org

Luis Rubio

How we Mexicans conduct ourselves has always caught my attention, such as blocking traffic by double parking, a political party advocating absurd and counterproductive bills, or a hotel entrepreneur destroying a wilderness area to add more rooms for guests. Why are Mexicans so endowed with behaviors that openly appear to be irresponsible, harmful to everyone, except to the immediate person engaging in them?

The essence of human freedom lies in each deciding according to his or her individual interest, whenever this does not affect third parties.  Among the thousands of examples of irresponsible behavior or those patently injurious to the collective interests that can be observed daily in the country, the big problem is how to define that collective interest and who decides it. ln a society where the rules of the game are perfectly delineated and establish what is fair and what is not, the third-party interest is plain; however, in a society in which those rules of the game are not clear or are styled so that there are no possible definitions, the collective interest is always diffuse. The key question is why Mexico does not have that unmistakable statement of meaning of the statutes or, expressed another way, what is it that drives and facilitates the adoption of irresponsible postures.

Another manner of posing this query is: What is it that renders it possible for no one to have to be responsible for their actions? It seems to me that there are two ways to respond to this, one generic and the other specific. On the generic side, there is no doubt that the country had changed a great deal in the last four decades: in that period there have been innumerable structural reforms, liberalizations, treaties, political pacts, electoral reforms and negotiations of all types that have transformed the economic, political and social panorama. Some approve of these changes, others decry them, but the change is real.

What is interesting from my perspective is that, despite all of those changes and transformations, the basic paradigm of the country’s governance has varied little. Allow me to explain: many of the changes undergone have modified the structure of power through the electoral system and altered the economic system through the liberalization of imports. Notwithstanding this, the criterion that incited all of those reforms, and that continues to orient decisions to date, is up-to-down vertical control. Regardless of the fact that many hard-fought elections are held, the form of governing continues to be that of imposition; the economy has been liberalized, but not for all things.  An example speaks more than a thousand words: the Free Trade Agreement (FTA), the main engine of the Mexican economy, constitutes an exceptional regime in the country because it is perfectly regimented in terms of the Rule of Law, but it only applies to companies that comply with certain criteria. All the rest of us Mexicans live under a regime of changing occurrences according to who is in power.

With regard to the specific, but derived from the logic of control, the system of government was designed from the beginning in the thirties of the past century so that only the individual in control would be responsible. That is, the government that emanated from the PRIist system was in charge of security, economic progress, social order and the future. Thus, the government was (is?) responsible for the country’s entirety.  That responsibility was derived from the nearly absolute exercise of power that characterized the Calles-Cárdenas system; power and responsibility go hand in hand: the greater the concentration of power, the greater the responsibility of the government. No wonder Ayotzinapa fell on the president’s lap.

Seen from the other side of the fence, the Mexican has no reason to be responsible. The government orders, the government imposes and changes the rules: therefore, no one outside the government is responsible and everyone is free to do what he likes.  And, furthermore, does.

The case of Ayotzinapa is the consummate case-in-point; had it happened during the Fox presidential term, the affair would have stayed in its place, where it belongs: in the municipality of Iguala. Fox did not attempt to control everything, thus he washed his hands of all responsibility. The present government attempts to control everything, which makes everything end up being its responsibility.

It is obvious that in this era no one can control everything, the reason why the mere pretension is preposterous. The sole possible solution lies in a paradigm shift.

The recent change of view in the matter of drugs unleashes a rare opportunity because it entails a new paradigm that can extend itself to the whole governmental system. When something is prohibited, the responsibility for compliance with the law falls to the government; when it is permitted, each person is responsible. In the case of drugs, from now on parents will be have to be responsible for their own lives and for those of their children: for educating the latter and for showing them the costs and risks of drug addiction. This implies that, at least in the issue of drugs, individuals will have to take charge of their acts and respond to the consequences of these.

Well orchestrated, this novel outlook could become the beginning of a new political paradigm, one that sets out from the principle that each is responsible, in politics as well as in the economy and the society; that each has to pay the price of their excesses and that the authority is there to institute clear rules and enforce their adherence. An enormous opportunity.

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 Luis Rubio

Life is always a balance between the half-full and the half-empty glass. Attitude with regard to life, work and the economy is basic not only for the development of countries, but also for political stability. Keynes spoke of animal spirits as the source of the conduct of economic agents and the manner in which these are moved by instinct, attitudes and perceptions. That observation from the thirties has done nothing other than erupt in importance in the era of ubiquitous communications that generate uncontainable expectations.

In recent dates, great debate has ensued with respect to the pessimism that appears to determine the country’s collective attitudes. How is it possible, some argue, that consumption is growing at the speed that it has during the last months (consumption being, at the end of the day, the objective of economic activity) and, however, people continue to view everything through lenses of pessimism? The entrepreneurs themselves, say government officials, affirm that their companies (excluding the oil sector) are going well and, yet, it would be difficult for their perceptions to be more negative.

The big question is whether things have gotten better or worse. The ills and the problems that Mexicans suffer from are obvious and there is no doubt that the incapacity to deal with some of them generates profound frustration and emboldens the pessimistic view. How can one explain, for example, that Mexico has for nearly a quarter century experienced abductions, extortions and homicides and that there is not yet even consensus with respect to the diagnosis of the problem, not even to mention a solution? How can one explain the incapacity of a succession of governments during these decades to see to the most elemental problems in terms of services, infrastructure, the now famous “permitology”, that is, the process of acquiring permits (for construction, opening a business, etcetera), or education? Each and every one of the problems has an explanation, often a logical one, but in conjunction, they furnish a poorly advisable legacy for the local and national governments of the three political parties. There’s no possible excuse.

And, notwithstanding this, an objective measurement of the reality shows enormous improvements in the last decades. The real price, after inflation, of innumerable basic goods has diminished; the number of families with their own home has grown dramatically; individual freedoms are incomparably superior to those that existed some decades ago; the quality of the goods and services that we consume and employ is superior beyond comparison. With all of the avatars, improvement in life levels is tangible.

In his extraordinary reflection on his father, and on himself, Federico Reyes-Heroles (Orfandad) recalls that on Sundays, he would accompany his father to a grocery store that sometimes stocked foreign goods to “see what there was to be found”, that is, to see what the shop had gotten in or imported that week. Today’s young people have no idea of what a closed economy means or of the inexistence of a certain article: everything today is available and at once.

If the objective reality has improved indisputably, why the reigning pessimism? Everyone has a theory but I believe that there are two immediate factors and one preponderant and absolute one that allow us to understand the phenomenon.

One without doubt is the corruption, associated with the perception that this has escalated in dimension.  Another is the absence of governmental leadership and, simultaneously, the nearly visceral rejection of any exercise of governmental leadership. These elements are interconnected.

The reforms that began in the eighties required tremendous exercise of leadership, without which that first great effort would have been impossible,  but the crisis of 1994-95 and its poor political management put an end to credibility in the reformist project. The “entrance of democracy” in 2000 stirred up the fire because of its inability to solve problems and the dreadful leadership that accompanied it. The current government promised to govern effectively, only to find itself without the magic wand that would have permitted it to achieve this.

The second great issue is doubtlessly that of corruption, which has exacerbated citizen ire. I do not know whether, in volume, corruption is now greater or lesser, but it is obvious that the citizenry’s perception is that it has exploded. Part is the mere fact that it is increasingly visible and that evidence of it is disseminated instantaneously. Another part is that, in the past, politicians were not as crass in their manner of engaging in acts of corruption: they took care with appearances because they knew that the matter had become explosive. At present there is no restraint in the least.

The absolute factor that has changed is the instantaneous information that generates unstoppable expectations. Formerly, information was controlled vertically and flowed according to governmental preferences from the top down. Today, information is ubiquitous and horizontal: it is generated and disseminated everywhere and no one controls it. Although there is evident capacity of manipulation, no one has the monopoly on it.

In his acceptance speech for the American Film Institute’s Lifetime Achievement Award, Sean Connery noted that his childhood was not promising but “I did not know we lacked anything because we had nothing to compare it to. And there is some freedom in that”. The big problem of governing in today’s world is that, as David Konzevik says, “The poor of today are rich in information and are millionaires in expectations”. Under these circumstances, “the art of governing is the art of managing expectations”. The country has improved, but with respect to the management of expectations our governments over the last decades have been appaling.

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ENFOQUE – April 2016

Luis Rubio

Mexicans live in the hope that someone will come to save them, a hope that is renewed every 6 years. This has to do with the obverse of the PRIist authoritarianism of old: a vast system of political control that curtailed the population’s capacity of action, obliging it to wait for a change from above. While the old system collapsed, its forms and its culture remain, even after two PAN administrations, a party that was created in reaction to PRI abuse. This circumstance gives rise to two parallel and in a certain manner paradoxical realities: on the one hand, Mexican society cries out but does not rebel; on the other, the country changes a great deal, and much more rapidly than it appears to.

The world seems difficult when one looks ahead and sees the challenges that Mexico faces and the apparently meager capacity to surmount them. However, when one looks back, it is impacting that so much has changed with regard to the country’s reality. Today Mexico is a manufacturing power, the population is at liberty to express itself as it wishes and quality of life levels have improved discernibly. Of course, none of that lessens the lacks that characterize the country, but it does put them in perspective.

The contrast in perspectives is revealing in terms of how Mexico has evolved over the last decades. Up to the end of the sixties, the economy grew with celerity and the authoritarian political system (that enjoyed enormous legitimacy) brought about an environment of order and peace. The federal government dominated all national life and took care of security with the methods of the epoch. That idyllic world began to crumble because it did not generate escape valves in the political sphere and because its economic sustenance (essentially the export of grains to defray the costs of importing capital goods) stopped functioning, generating a growth crisis.

From the beginning of the seventies, one government after another has developed responses to the growth problem. Some led the country to the brink of bankruptcy (1970–1982); others built permanent structures, such as the North American Free Trade Agreement (NAFTA), which contributed to the transformation of the industrial plant. However, similarly to what occurred in the political ambit, that process of economic change has remained truncated due to the presence of power factors that benefit from the status quo. In contrast to transformative processes in other nations, in Mexico there has existed the spirit of change but not the inclination or competence to modify the power structure (both economic as well as political).

The political transition that the country has undergone manifests this in unmistakable fashion. Despite there being an initial agreement (1996) with respect to reforming the electoral rules in order to guarantee electoral equity, there was never an agreement on the point of departure and even less so on the objective to be achieved. In this manner, national politics continues to be as contentious as before and parties recognize the election result only when it is favorable to them. That is, an election is democratic if I win, but not if I lose. Thus, while there is no way to deny the professionalism of the electoral organs and the transparency of the election processes, nearly 35% of the population thinks that what is relevant is not the process but rather the result.

It is within this context that the arrival of President Peña-Nieto into the government and his incapacity for advancing his agenda should be understood. Having been a successful state governor, Peña-Nieto promised efficacy as his calling card. As soon as he assumed the presidency, he launched a legislative whirlwind. In only a few months, the Mexican Constitution had been transformed with respect to its main articles. The agenda for change was not new: all of what was reformed had been discussed for decades; what was impressive was the political skill displayed to achieve the conversion of the reforms into law. The President exhibited a great ability for negotiation, but the key factor, the only one that his PANist predecessors were unable to administrate, consisted of controlling the army of PRIist partisans. For historical reasons, the PRIists, the power holders for decades throughout the XX Century, are also the beneficiaries of the status quo. Their opposition to previous reform proposals was the product of their desire to preserve their poaching rights. Peña’s success resided in controlling those groups and avoiding their blockage of the legislative process. However, as soon as that was accomplished, those same interests returned to what they had always done: ignoring the reforms and continuing to engage in their time-honored métiers.

In addition to the legislative marasmus, the new government ensconced itself above the society and reinvented old mechanisms of control upon the society, the governors, the media, the unions, and the entrepreneurs. This manner of acting responded to a quintessential consideration: the government set out from the premise that the country required a restoration of order and the best model was that of the PRI golden era: the sixties. Though it is obvious that the old political system and the economic strategy of yesteryear did not crumple due to the will of the then-governors, the Peña government turned a blind eye to the changes that have taken place in Mexico as well as in the world during these decades and focused on   carrying out its own agenda of transformation –and its own reality.

The population encountered the advent of Peña-Nieto and his assertiveness with a mixture of amazement and expectancy. Like the great Tlatoani, the Aztec leader, Peña came onto the scene to save Mexico. In a daze, Mexicans saw how the economic performance of the administration went from bad to worse, tax increases affected the consumption of the most impoverished population and the ire of those affected by the insertion of controls was accumulating. As soon as the first crisis presented, –the straw that broke the camel’s back- the entire country turned against the President. Beyond the deaths of the 43 students in Iguala a year ago, its political significance was clear: it became an excuse for the whole population, in collective anonymity, to voice its dissent.

The extraordinary part is not the anger or the upset, both observable and predictable, but instead the absolute incapacity of the government to respond. Efficiency was forsaken, now replaced by a fearful and paralyzed government. The reality of the power in Mexico had won: in the end it was evident that the government did not intend to alter the power structure but only to merely incorporate a certain efficiency into some sectors or activities exhibiting potential, all of this without undermining interests already reaping benefits from the system.

What the experience of President Peña demonstrated is that Mexico has a serious power problem: there is no elemental set of game rules that enjoy full legitimacy among all of the political actors, so there are no rules at all. The governor possesses enormous powers that allow acting arbitrarily at any time, the reason being that investment –and credibility- is limited to a sexennial time frame and everything revolves around the confidence inspired by the president in turn. That is to say, Mexico’s great problem is that it lacks institutions that confer permanence and legitimacy on the system of government and assurances of soundness on Mexicans.

Therefore, Mexico is suffering through permanent schizophrenia:  great changes and few achievements; regions that are thriving and great poverty in others; a government pledging efficiency but only a little. Mexico is trapped between the old system of controls that persist and an increasingly prepared, increasingly demanding society. As in the old times, that permits apparent stability but guarantees permanent illegitimacy. Until the next president emerges with newly minted avowals.

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Luis Rubio

The world formerly functioned vertically because everything was concentrated: information, control of the factories, labor relations. The decisions were centralized and the society knew what the power structures would permit. The world of today is increasingly horizontal, one in which information has a multiplicity of sources (that are autonomous, such as the social networks, and feed onto themselves); in the economy value is added along the process of production over which no centralized authority has control; and the unions have lost their capacity to control downwards and sell the service to the powers that be. This, what takes place in political ambits, is not distinct from what is observed in schools, families and governments. The monopoly of power disappeared, or at least became dramatically weakened, because it is incompatible with a modern economy and a society with the means to develop itself.

The phenomenon is universal and no one can be exempt, except if one opts for impoverishment on abstracting oneself from the exterior world, as occurs with some reclusive systems. Although, of course, each country has its own characteristics that emanate from its history and circumstances, many of the challenges that Mexico faces are not, at least in concept, radically different from those of other nations.

What follows is an evaluation of China* that, were I to remove the name, would appear to be absolutely Mexican:

• “Contemporary authoritarian regimes, lacking popular legitimacy endowed by a competitive political process, have essentially three means to hold on to their power. One is bribing their populations with material benefits, a second one is to repress them with violence and fear, and a third is to appeal to their nationalist sentiments.  [The government] has employed all three instruments, but it has depended mainly in economic performance and has resorted to (selective) repression and nationalism only as a secondary means of rule.”
• “Autocracies forced to strike a Faustian bargain with performance-based legitimacy are destined to lose the wager because the socioeconomic changes resulting from economic growth strengthen the autonomous capabilities of urban-based social forces, such as private entrepreneurs, intellectuals, professionals, religious believers, and ordinary workers through higher levels of literacy,  greater access to information, accumulation of private wealth, and improved capacity to organize collective action.”
• “If the [country’s] long-term economic woes are purely structural, the country’s prospects are not necessarily dire. Effective reforms could reallocate resources more efficiently to make the economy more productive.”
• “To be sure, the economic reforms… have changed the country beyond recognition. However, the [system] has yet to shed its predatory instincts and institutions.”
• “The [government’s] rejection of any meaningful limits in its power implies, in practical terms, that [China] cannot have truly independent judicial systems or regulatory agencies capable of enforcing laws and the rules.”
• “As long as the party places itself above the law, real pro-market economic reforms are impossible”.
• “What is holding the Chinese economy back is not its dynamic private sector, but its inefficient state-owned enterprises which continue to receive subsidies and waste precious capital.”
• “Genuine and complete economic reforms, if actually adopted, will threaten to destroy such foundations.”
• “The continuation… of predatory and extractive institutions precludes successful, radical, and complete market reforms… (making impossible) the task of constructing a genuine market economy supported by the Rule of Law. The notion is that wealth is positively correlated with democracy. A closer look at the data, however, shows that nearly all the wealthy countries ruled by dictatorships are oil-producing states, where the ruling elites have the capacity to bribe their people into accepting autocratic rule.”
• “As the era of rapid growth produced by partial reforms and one-off favorable factors or events ends, sustaining [the country’s] economic growth requires a radical overhaul of its economic and political institutions in order to achieve greater efficiency. But since this fateful step will destroy the economic foundations of [the system’s] rule it is hard to imagine that the party will commit economic, and hence political, suicide.”
• “Those unconvinced by such reasoning should count the number of dictatorships in history that willingly gave up their privileges and control over the economy in order to ensure long-term national prosperity.”
• “The most important source of change in authoritarian regimes is the collapse of the unity of the ruling elites… This development is caused principally by the intensification of conflict among the ruling elites over the strategies of regime survival and distribution of power and patronage… Experience from democratic transitions since the mid-1970s shows that, as autocracies confront challenges from social forces demanding political change, the most divisive issue among ruling elites is whether to repress such forces through escalating violence or to accommodate them through liberalization.”

The politico-economic dynamics of Mexico and of China are radically distinct, but the challenge is highly similar.

*Pei, Minxin, Twilight of the CPP? The American Interest, Spring 2016

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a quick-translation of this article can be found at www.cidac.org

The Catalyst,  The North American Century,

Spring 2016  – Luis Rubio

http://www.bushcenter.org/catalyst/north-american-century/education-essays.html#rubio

The transition from the agricultural era to the Industrial Revolution was traumatic for many around the world, but the digital era constitutes a nearly absolute divide. In this new era, education is the crucial differentiating factor. Creativity makes a person successful and advances the economy and larger society.

Luis Rubio

No perfect model exists for the relationship between Mexico and the U.S. because there is no other relationship like it. There are many nations that share lengthy borders, but none in which such great differences of development and incomes intersect. There are many nations that exchange inordinate volumes of goods and border crossings, but none is as active as that shared by these two North American nations. Certainly, there are numerous duos of European countries, Canada-US and some in Asia that experience similar processes of industrial integration, but none resembles ours in terms of the combination and dimensions of border entries and exits, commercial interchanges and populations living at close range on the other side of the mutual frontier.

The U.S. electoral contest has evidenced that Mexico is an important and inevitable actor, a circumstance that can lead to two conclusions: one, that we should shut our eyes and trust that the Americans will know how to act in the most responsible manner; the other, that we should respond in determined fashion. The first alternative is absurd because that is not the way to conduct the affairs of a sovereign and proud nation like Mexico. The second would be apt only in that it implies not confronting but, simply, developing a strategy that curtails our vulnerability and renders the internal political process irrelevant regarding the functionality of the things important to us.

As Octavio Paz illustrated myriad times in his marvelous prose, our border is exceptional because of the clash of cultures, histories, and civilizations that it represents. Nor is the relationship similar to that frequently mentioned as a model one, that of the U.S. and Israel, because the factors that vitalize the U.S. Jewish community have nothing to do with Mexican communities in the U.S., starting with the fact that U.S. Jews do not originate from that country. The supposed similarities are not such.

A Mexican ambassador in Washington in the eighties summed up the traditional view of a style that is revealing of a whole era: “neighbors now, partners now, friends never”. That form of conceiving of the relationship has led us to where we are now: lacking a strategy, abandoning our interests and ceding the initiative and all of the spaces to our detractors: unions, ecologists and anti-immigrant groups. Instead of acting within the natural and permissible fabric of the U.S. environment and Washington politics, we have remained marginalized -dauntless- before the spectacle of the destruction of the name of our country and our compatriots.

After years of ignoring Mexicans who had migrated north, present-day Mexican politics is nearly exclusively concentrated on these very individuals. This is natural and logical, but it is insufficient. Clearly, the Mexican Government retains the obligation of attending to the compatriots, to solve their affairs and to protect them. But it is crucial to understand that Mexican-Americans are not there to help Mexico or to become tools of the Mexican Government. Rather, it is the Mexican Government that must assist them, trusting in a long-term reconciliation that, far from being utilitarian, would be the product of mutual recognition and respect.

On the other hand, the abandoned component of the relationship is that relating to the Americans themselves. In contrast to the dearth of historical memory in many of their matters of foreign affairs, memory with respect to who their friends are and who are not is legendary. Although we generated an exceptional presence when NAFTA was negotiated at the initiation of the nineties, we never faced the consequences when adverse moments presented (such as the assassinations of 1994, the devaluation of that year and, above all, the pathetic response to the events of September 11), in addition to the devastated expectations of the failed Fox regime as well as the inefficacy of the present government. We proceeded from hyperactivity to total absence, creating an unfavorable if not hostile ambience on the part of our main commercial ally. The key is not to be leading characters but to face the music.

The relationship with the U.S. requires attention to two realities that are very distinct, but not mutually exclusive, and that should never be contradictory. We cannot pretend to influence their internal affairs and simultaneously take on the stance of neutral partners. This is about the principal bilateral relationship that we possess and that will always be central due to geographic, economic and geopolitical reasons. None of that impedes us from engaging in active relations with the rest of the world, but this one has to be, in the political argot, “of State, wholly non-partisan. It appertains to a relationship that can be limiting if we do not develop it, but one that can also be a source of infinite opportunities if we cultivate it properly. Our objective should be that of safeguarding and advancing our interests, while concomitantly making possible a workable and mutually satisfactory coexistence.

In 1992 the government erred on wagering on a candidate, who lost.  Our logic should never embrace choosing candidates or attempting to manipulate results. Strictly speaking, it is critical to never again return to a situation like the current one in which we are a major part of the U.S. internal debate without the instruments or the possibility to act. We should project an active presence, but a discrete one that, paradoxically, makes us invisible: allow no one have any incentive to attack Mexico and Mexicans. Precisely the reverse of where we find ourselves today.

www.cidac.org

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Luis Rubio

“Solving poverty without addressing the problem of inequality of opportunity,” says  Gonzalo Hernández Licona de Coneval, “could imply that the relevant participants [in the society] would be same ones as always”. In effect: it is impossible to deny the fact of inequality. But there are two pertinent questions: first, what should we do while the problem of inequality is solved, the latter presumably more complex than that of poverty? And, second, how is the inequality to be confronted? The answers are anything but obvious and require more than insults and worn-out clichés to address and mitigate these problems at their core.

Some weeks ago I wrote proposing that the problem is the poverty because it is lacerating, impedes social mobility and, above all, could be attacked with relative celerity. That text generated widespread polemics. I would like to explain my perspective on the dynamic between poverty and inequality.

Before anything else, inequality is an inherent part of human society, but there are two clearly differentiated sources of inequality: on the one hand, the inequality that is the product of human creativity and that is the source of the growth of the economy. The technological development of the last decades illustrates this to perfection: a few technological ventures have revolutionized the world, in addition to producing a wealthy cast never before imaginable. The same occurs with great artists, sports figures and actors who, maximizing their skills, have differentiated themselves from the income of the common mortal. Clearly, these people have succeeded because they were born with their main needs satisfied. This source of inequality should be applauded because it is the product of open competition, inventiveness and innovation. Those pretending to combat (or regulate and annihilate with excessive taxes) this source of inequality would be killing the hen that lays the golden eggs.

The other source of inequality is more difficult to solve, but it is that to which Hernández Licona refers: the inequality that is the product of monopolies, social practices, corruption, subsidies, concessions and, above all, absence of competition. This source of inequality is the result of political and bureaucratic decisions that, historically, skew income, protect the favorites, safeguard poaching preserves and, mainly, hinder the access of ordinary folks to social mobility, even when these are born with their basic needs satisfied. This source of inequality has been that which has marked Mexico since the Colony, giving rise to a nation of poor people, polarized in their social classes with an accentuated racism and an absence of opportunities for the immense majority of the population.

The true problem is how to confront this challenge. The easy, and frequent, proposed solution is a combination of regulatory measures and tax increases for high incomes (those who always find ways to pay less) in order to distribute these later among the poor. It sounds obvious, but it doesn’t cease to amaze me that this proposal entails that the very politicians and bureaucrats who caused the problem –and who preserve it- would be those who would now engage in solving it. That is, just as an example, it would mean that our diligent state governors, those who waste the resources, who pocket the Public Treasury monies without any consequence and leave multimillion debts at the end of their mandates, would now devote themselves to redistributing the income in favor of the poor. Not likely.

To really transform the country, generate conditions for the economy to grow rapidly and eliminate the second source of inequality, we would have to carry out an integral change of the sociopolitical regime. Unfortunately, many politicians and candidates –and their advisors- promise to eradicate inequality in no time at all when their sole proposal is to reach power.

If one accepts that inequality is the product of a series of biases that give rise to and preserve it, the only way to get rid of it is to eliminate those biases and that is a political matter: it implies modifying the social, political and economic structures that prejudice the benefits in favor of one part of society and discriminate against the rest.

From my perspective, only a liberal system of government could achieve this. A liberal system sets out under the principle that everyone should possess the same access to opportunities: the laws are designed so that everyone has the same rights; a system of justice that effectively engenders conditions so that all Mexicans, beginning with the most modest of these, have access to justice under equitable conditions; and the function of the government is that of, on the one hand, ensuring that everyone has equal possibility of access (enter here the fight for combating poverty but oriented toward eliminating barriers to equality of opportunity) and, on the other hand, establishing a set of game rules that everyone knows beforehand and that the government enforces compliance with.

In sum, confronting inequality is not a matter of regulations or taxes but rather a distinct sociopolitical regime. Because I see that a change in that direction is very scarcely probable, it seems to me that combating poverty, aiming at equalization of access to opportunities (above all education and health), is the only way that we could and could proceed, at least for now. Beyond actions on this front, only rapid economic growth could permit the significant reduction of poverty and that requires a change of focus in economic policy.

What should not be done it to confuse causes with results and pretend that matters of this transcendence are merely technical and not subject to exploitative electioneering or ideological preference.

www.cidac.org

@lrubiof