Luis Rubio

In one of his memorable interventions in the escalation of the invasion of Iraq, Donald Rumsfeld argued that “…there are known knowns; there are things that we know that we know. There are known unknowns; that is to say there are things that we now know that we don’t know; but there are also unknown unknowns ―there are things we do not know that we don’t know”. While this seems to be a tongue twister, the then U.S. Secretary of Defense laid bare a reality for anyone venturing into unknown lands and circumstances. Governors, businesspeople and investors confront these problems every day because it’s never feasible to have at their command the entire film of what is in store. That uncertainty has been aggravated dramatically in the last years.

Although it is beginning to stir, the European economy is experiencing disastrous times; the U.S. threatens to enter a descending stage of its economic cycle and China appears, finally, to justify its long time Cassandras with lower growth rates. Oil prices, the strengthening of the U.S. dollar and the worsening of the Mexican peso with the failed Pemex Ronda Uno and the growing fiscal deficit has done nothing other than obscure a panorama that itself was already cloudy.

Each of these issues entails its own complexity and potential consequences, but the combination is what is disturbing in all respects. The uncertainty that this causes is infinite and explains the mixture of fear and distrust that characterizes Mexicans at this time. The only one that hasn’t taken note of this is the government.

In his book Mass Flourishing, Edmund Phelps, who was awarded the Nobel Prize in Economics, asserted that the climate favorable for innovation was the trigger of economic growth from the XIX century. This thesis, similar to that of Deirdre McCloskey in Bourgeois Dignity, implies that where there exists a milieu of social esteem and support for creators and innovators the economy prospers. I ask myself: what has the current government done to promote innovation, something complex in itself, but at least to generate an environment of trust in the business community and potential future innovators? There’s not the least doubt that the devaluation of the peso responds to external factors, but it is absurd to ignore the internal ones that are worsen it by the minute.

According to Phelps*, innovation is diminishing due to the excess of regulations that overwhelm the producer of goods and services in growing fashion throughout the world. He states that every time a mechanism of regulation or protection is appended the capacity to innovate is reduced: extreme examples of this include the corrupt political systems that protect rent seekers of any ilk. Phelps observes that school systems have abandoned the sources of inspiration that endorse innovation and the rise of creative individuals. Forsaking the reading of the classics and, above all, foregoing the exaltation of individual merit through the readings and histories of discoverers, explorers, scientists, entrepreneurs and, in general, successful people, has had the effect of placating imagination and creativity, key factors in the economic growth of the present stage of the world.

For his part, Carles Boix** notes that on undergoing technological changes, (such as the introduction of new irrigation systems), societies based on simple agriculture experienced social changes that produced distinct political results. In its nomenclature, those whose who benefited from or who knew how to take advantage of the new technologies were denominated the “producers”, who evolved toward the construction of political regimes that today we would call republican with elected leaders, a legislative assembly and a system of government that would come to protect them from the losers. There where the producers triumphed, as in many Greek cities and the city-states of Europe, the society ended up granting privilege to economic growth, productivity and competition.

Those who remained at a disadvantage and who lost out before the producers, whom Boix calls pillagers or looters, devoted themselves to fighting over the crumbs, creating a Hobbesian context of insecurity, which lead to the preference for monarchial or dictatorial governments that would protect the status quo, oblige the producers and the government itself to provide food, work and income and to guarantee the existence of defensive and protective mechanisms for the vanquished. Societies in which the plunderers are the victors propitiate lower growth rates and the flowering of systems of privilege that distort competition and impede innovation and technological change. In Mexico there is no doubt that the pillagers always enjoy the support of the government.

These historical considerations are relevant because they demonstrate that the sources of stagnation and vulnerability are not new. International uncertainty cannot mask the enormous mistrust that the current government and its poor decisions have procreated and aid in understanding the sources of stagnation and the vulnerability in which the country finds itself in the face of the uncertainty presently characterizing the world.

Compete and innovate or protect and preserve? Seek to raise productivity or increase salaries by decree? The deterioration is growing; the sudden change of trend in the depreciation of the peso in the last several weeks should lead us to recognize that what is at stake is the heart of the country’s development: trust-building has been given the cold shoulder for the past three years. In contrast with Rumsfeld’s brief address, the causes of Mexico’s situation are perfectly known.

*What is wrong with the West’s economies?

**Orden político y desigualdad

www.cidac.org

@lrubiof

Luis Rubio

 A few years ago, when Italy was traversing an electoral moment, a European publication accused the Prime Minister of suffering from a disease so rare that it had yet to be found in any medical journal: “proclamitis”, the compulsive announcement of new rules of the game. Mexico’s electoral system seems to be like this. The sum of hypocrisy, distrust and the self-righteousness have led to the construction of a complex electoral system full of statutes unable to be complied with, restrictions to which no one is willing to adhere and infinite opportunities for the emergence of grievances, lawsuits and allegations. It is clear that the problem lies in that the electoral issue was resolved prior to that of the power, the reason why full electoral legitimacy will never be achieved. However, I question myself as to whether it wouldn’t be possible at the very least to rectify the absurdities and excesses that the system entails: Wouldn’t a less convoluted and more liberal system be better?

A long-standing legal principle –traffic laws come to mind- asserts that everything that is not expressly prohibited is permitted. But that’s not always the way it is: Enrique Jardiel-Poncela, the extraordinary Spanish playwright who lived through the autocratic Francoist dictatorship, wrote that the “dictatorship (is a) system of government in which everything that is not prohibited is obligatory”. Our electoral system also appears to be that way and this has not favored the procurement of greater legitimacy: nearly 40% of the population consistently rejects the result of an election when it does not endorse its favorite. In the past elections the Morena party president (Marti Batres) rebuffed disputes about the elections that his party won, but he without the least embarrassment demanded the modification of those that it lost: if I win it’s democracy, if I lose it’s election fraud. The paradox is that the majority of reforms of the last decade –reforms increasingly restrictive, extravagant and regressive- designed to satisfy those who from the outset repudiate the mechanism, especially the Morena leader (i.e. Lopez Obrador). Wouldn’t it be better to return to the spirit of the 1996 political-electoral reform, whose objective was a level playing field for there to be real competition? More freedom, fewer controls.

Even if one were to take this further, there are arguments postulating that any electoral conception is inane. Perhaps the best example is the commentary on the recent Nigerian elections of Don Boudreaux, a professor of Economics: it is interesting that the photographs that appear in the world press are of persons lining up to vote, which vindicates, he says, Western prejudices about the importance of voting in a democracy. However, he goes on, “The photos that I would most like to see are photos of Nigerians or Iraqis holding up or wheeling carts full of consumer goods, or giving cash or credit cards to store clerks—symbols not of the right to vote for politicians but rather of the right to choose freely in markets”.*

There’s no reason for one to have to choose: politics and the economy are two spaces where the population, in its character of citizen and consumer, respectively, makes decisions with respect to their personal life. Each of these spaces requires ordinances that permit the population to function. However, while it’s obvious that enormous distortions persist in the economy, in no way may they be compared with the electoral absurdities. The issue is of essence and within it dwells permanent tension, in all societies.

The tension between democracy and freedom is old and known: even in places where the political organization works well, there will always be tense circumstances between the political objective of achieving equity for all and the economic efficiency that creates disparities among citizens. That tension has been a constant in the history of humankind and every society has attempted to find the equilibrium point that works for it. In Europe, the U.S. and what is known as the West, the norm has comprised diverse variants of capitalism and democracy. In the socialist nations of the past century equality was favored over efficiency and in many Asiatic nations, notably China, emphasis has been placed on efficiency at the cost of freedom. Given the democratic disenchantment that Mexico has experienced, I ask myself what it is that the population would prefer, which equilibrium point between freedom and democracy it would favor. What I entertain no doubt about is that an overwhelming part of Mexicans think that the electoral system is excessively expensive, and that we really have no idea of the sum that it involves, surely on an order of magnitude tens of times superior to the official cost.

How can the electoral conundrum be solved? I see two possibilities. One would be to continue reforming –that is, restricting- according to the protestations presented concerning the most recent electoral contest. However, this path would demand that all law schools develop the academic specialty of negligible trivialities in order to be able to settle disputes on progressively irrelevant things. The alternative would be to recognize that the restrictions have not improved the quality of the elections, have not impeded the three great parties from undergoing significant losses nor –more importantly- have they been an obstacle to the constitution of legislative majorities. Of course, that would wind up in that interminable proclamitis (and its equivalent in electoral rules), but in the meanwhile, why not make life –in the economy and in politics- simpler and more reasonable?

*cafehayek.com march 29, 2015.

www.cidac.org

@lrubiof

FORBES – Luis Rubio

“Experience, wrote Frederic Bastiat, teaches us effectually, but brutally. It makes us aware of the all the effects of an action, by causing us to feel them; and we cannot fail to finish by knowing that fire burns, if we have burned ourselves”. The Greek drama of the last months has led me to reflect on our own experience with the crises of the seventies to the nineties and my conclusion is less benign that what I had anticipated.

We tend to congratulate ourselves on the fiscal health that the government enjoys, at least until a few years ago. After decades of poor management, excessive spending and a growing debt, the country finally achieved breaking with the piling of recurring crises and, although it has not attained high growth rates of the economy, at least there are no sudden ups and downs in the currency exchange rate or in prices, at least ones  directly attributable to internal factors.

Thus, while far from being perfect, our fiscal situation is infinitely better than that of innumerable countries, beginning with many of the developed nations. In contrast with the latter, our risk of overstepping ourselves entails causing a crisis in the balance of payments and fiscal accounts, with devastating consequences for employment and stability. It is for that reason that, from 1994, the greater part of the political establishment acceded to not being able to put fiscal equilibrium at risk.

This that we learned the hard way is something that various European countries lost sight of when they entered into the European Monetary System. On being part of the euro,  bucountries with weak institutions like Greece, Italy, Portugal and Spain achieved German interest rates with Mediterranean comportments. That is, they appeared to be enjoying the privilege of those who were elevating their productivity in systematic fashion, without having to work like they do. Two decades later, the costs have just become evident: the southern countries, such as Greece, have accumulated enormous debts but are trapped in the monetary system that made the lustfulness possible.

The Greek crisis has made me reflect on how it was that we achieved steering the fiscal accounts to a happy ending. The Greeks affirm that they have reduced their expenses, adjusted some salaries and improved the productivity of their economy; while that adjustment has been infinitely less grand than the similar one taken on by other European economies in distress, in absolute terms it has been ludicrous. The conclusion I’ve come to is that what has permitted us to procure fiscal adjustment in Mexico was the combination of two things: a group of technocrats with mental clarity about what had to be achieved (the condition sine qua non), but also a devaluation. It was the sum of these two elements that allowed for the adjustment. At least to date, none of these two is present in Greece.

Let us begin at the beginning, why is it a devaluation. What is visible about devaluation is the change in the relative value of one currency in terms of another. However, the immediate consequence is that all profits denominated in the devaluated currency depreciate, that is, salaries, pensions and fringe benefits possess, of a sudden, a new (lower) value. The Mexican devaluations from the seventies to the nineties, all caused by poor financial and fiscal management, implied an immediate adjustment of the internal costs. In this manner, while there were many difficult decisions that the authorities were required to make in budgetary matters in those years, a great part of the adjustment occurred due to the very fact of the devaluation itself, not because the government had fought with the unions, businesses or bureaucrats. The devaluation made their job easy, something impossible for Greece within the euro.

For the Mexican technocrats who had to deal with the devaluations,  the problem was acting in order to avoid internal prices from increasing rapidly, assigning scarce resources for the greatest economic benefit they could supply and dealing with the debt in foreign currency that multiplied without warning.

The problem of Greece is two-fold: first, on being within the euro it has not way of depreciating the value of its liabilities in order to begin to recover; but, second, on exiting the euro, it would need a technocratic team –which the current government plainly lacks- to convert the devaluation into an opportunity. Otherwise, Greece would end up in an even worse crisis. I never imagined viewing devaluations as a salvation, but Greece requires one.

www.cidac.org

@lrubiof

Luis Rubio

Korea and Mexico were more or less the same at the beginning of the sixties. That was a great time for the Mexican economy, with growth rates above 6% annually and a per-capita GDP higher than that of Korea, a country devastated and divided after a long and bloody civil war.

Fifty years later, the tables have been turned and Korea is today a developed nation, with a thriving economy, an impressive industrial base, leading enterprises in the most diverse sectors, including high tech, and an enviable democracy. I have visited Korea on various occasions over the years and am always impressed by the speed of the change that it undergoes, but above all the clarity of course that characterizes it and the diligence with which it has addressed its crises, overcoming authoritarian governments and constructing such an impressive economic, political and social platform.

Behind the Korean success lies an Asian ethic that is radically distinct from that which we know in our environs and perhaps that explains part of its performance. However, not all of the nations of Asia have been similarly successful and Korea is exceptional because its development was the result of a deliberate and explicit process of decisions to transform itself after the war. At the heart of its success lie two crucial factors: leadership and a model educative system.

Leadership has been a distinctive characteristic across decades and has been comprised a virtue that has allowed it to adapt itself to the times. The country endured crises of the most diverse nature: the assassination of its President and his entire Cabinet with a bomb explosion, authoritarian governments, financial crises and a permanent state of tension with its North Korean neighbor. What is impressive is how each of those crises became a platform of transformation. Its emergence from the 1997 financial crisis is illustrative for us because that country not only corrected its fiscal variables, as always occurred in similar situations in Mexico, but in addition it modified the structure of the whole economy, obliging its great industrial groups to compete openly. The point is that governments come and go, but there always was a clearness of vision of what was important. They learned from the crises and took a leap forward.

In Korea, as in the rest of Asia, corruption has been a permanent fixture of economic and political life, but that has not made them loose clarity of purpose, reducing corruption to something lesser in importance. Economic progress began in Korea by imitating the Japanese, but later they adopted their own strategies. When the trade patterns were altered, they emphasized a change toward high technology; when a political crisis presented, they moved toward a democratic system. Of course these things were not linear, automatic or spotless, but a bird’s eye view reveals an unmistakable clearness of course. The result is visible in the form of highways, bridges, universities, commercial complexes and, in general, in the vitality of its cities and communities.

In terms of education, Korea constructed one of the most competitive and at the same time one of the most demanding systems worldwide. Students are required to pass brutally tough examinations to get into college and that step determines their opportunities and future in life. The conduct of Korean students –there and everywhere in the world that they find themselves- manifests itself in an absolute devotion to study. Will that permit them to transcend the current limits of science and technology to which they aspire? Time will tell. Years ago, when the Japanese seemed to be on the verge of dominating the planet, the weekly periodical The Economist conducted an analysis on the potential of the Japanese educational, scientific and technological system of outsmarting that of the U.S. Its conclusion, surprisingly, was that the intensity of their education was insufficient to surmount the creativity made possible by the liberal North American education system.

I do not know to what extent this conclusion continues to remain valid, but Korea now finds itself before that tessitura. How can the U.S. capacity of giving rise to startups, technological companies susceptible to transforming whole economies, as was the case of Microsoft, Facebook and Google be reproduced? No one else has solved this enigma, but what stands out in Korea is that it finds itself in the midst of the same debate as France, Germany and Japan. Impressive for a nation that a half century ago was a rural country with a GDP per capita one half of Mexico’s. All that inexorably takes me back to CETEG, the CNTE and other superlative manifestations of Mexico’s educative system. Worlds apart.

Current debates in Korea are divided into two. The geopolitical debates, and those relative to its economic future, although these are often the same. When all is said and done, Korea is a “sandwich” country between two powers: the U.S, with a strong military presence in the zone bordering North Korea, and China. One recurrent saying there is that “in a fight between whales, the shrimp’s back is broken.” China has become Korea’s main commercial partner and Koreans have learned to operate with their two counterparts successfully. They are now seeking an FTA with China and have joined the new Asian Infrastructure Bank, promoted by the Chinese. It continues to impress me that, in spite of the complexity of their geography, they have known how to achieve what’s important. It would behoove us to learn some of that.

www.cidac.org

@lrubiof

 Luis Rubio

The recent elections illustrated, once again, one of the greatest paradoxes that characterize Mexico. The country has taken extraordinary steps in electoral matters but, nonetheless, there is no let-up of conflicts, of insults and above all distrust.  Although diverse political parties and, now, independent candidates, participate actively, there persists in a good part of the electorate –and in too many political parties and candidates- the notion that an election is legitimate when I win but not when I lose. What does this tell us about Mexico, about its politics and about its capacity for transcending that permanent source of conflict and illegitimacy?

The issue is not new. The current political system represents an evolution of the old PRIist system; more than a change of regime, what actually occurred in past decades was that Mexico went from a one-party regime to one in which three parties share the same privileges and prerogatives that the PRI enjoyed exclusively in former times. However, the first paradox is that those three political parties have been losing ground in the face of the uncontainable growth of partisan options, many of these pathetic. In this way, although it is extraordinarily difficult to create (and preserve) a new political party, the latter do not stop proliferating. The financing that accompanies the parties with registration explains this second paradox, but it does not cease to be significant that it is so difficult to maintain the registration, as if it were a mechanism designed to safeguard an oligopoly. What is not in doubt is that the partisan-electoral system keeps its distance with respect to the citizenry, protects the political parties and the government from the population and keeps alive the authoritarian culture from which the system sprang from the outset.

The contrast with nations at the South of the continent is suggestive. While there are very repressive dictatorial regimes in many of those countries, in Mexico the PRIist system achieved stability without only exceptionally resorting to repression. Its proclivity for control and co-optation confirmed for Mexico a long era of progress. However, when those nations were democratized, their citizens were incisively able to distinguish the new regime from the one that preceded it. The contrast was black and white: no one had any doubt that a civil was distinct from an authoritarian regime. That distinction in Mexico was never possible: the PRIist regime was authoritarian and its culture and legacy have been preserved, not only in the PRI and its derivatives but also even among PANists who denounced the regime ad nauseam. The nodal point is that authoritarianism continues to be a discernible characteristic with respect to the way political parties elect their candidates, recognize or reject an electoral result and, perhaps more than anything else, in the distance that exists between citizens and governors.

Authoritarianism works as long as the population submits to it and accepts the control, that is, as long as this is perceived as legitimate; the anger against corruption shows that that legitimacy no longer exists, which renders an authoritarian system unsustainable. Recent events have evidenced that the population has learned to make use of their vote to reward and punish; it would not waste its disgust but would rather channel it. The sole fact of the three big parties losing representativeness is unprecedented and revelatory. Mexican authoritarianism might be profoundly deep-rooted in the society and in its manner of acting and proceeding, but it has lost all legitimacy.

This reality positions us right in the line of succession for 2018. Within the government the smell of the old times is in the air, anticipating the hand-picked candidate in the old PRI style. Something contrary to this is perceptible in the legislative PRI and, much more clearly, in that of the state governors. As long as the President maintains his team intact, a collision can be anticipated. Contrariwise, were change to take place and were an assorted portfolio of potential candidates proffered on the part of the President’s party, the probability of internal combustion would diminish. The way that the PRI solves (or does not solve) its dilemmas will set the standard for the remaining parties.

Each of the opposition parties experiences its own process and crises. Some pre-candidates are obvious, others dispute party presidencies and candidacies.  Something particularly prominent is the appearance of a new political “species”: that of the pre-candidates whose common characteristic is being ex-PRIists. Today the possibility does not seem far off from the 2018 elections being solely between PRIists and ex-PRIists, under distinct party or independent denominations. What would such a scenario tell us?

The power monopoly that the PRI exercised for so many decades procreated a political class that was endowed with skills in the management of power, a circumstance from which the other parties were exempted, explaining to a certain degree the PANist debacle. That provides an explanation for the presence of so many potential players originally from the PRI in the public arena. The crucial question is whether some of those potential candidates and parties would have the capacity and vision to propose a reform of the structure of power that would transform the country to its core. If the authoritarianism of yesteryear no longer works, what would the probable candidates replace it with?

On the interaction between the proposals and coalitions that those individuals forge and what happens in the government and the PRI rests the determination of the future and viability of Mexican politics.

www.cidac.org

@lrubiof

Luis Rubio

After Wilson’s departure from the Paris Peace Conference at Versailles following World War I, Clemenceau, on his way to a meeting with Colonel House, Wilson’s adviser, was fired on by a young anarchist, Émile Cottin. As Clemenceau’s car sped away, Cottin fired seven (some say eight) more shots. One hit Clemenceau near the heart. Cottin was apprehended and the death penalty demanded. Clemenceau intervened: “We have just fought the most terrible war in history, yet here is a Frenchman who misses his target six times out of seven… Of course the fellow must be punished for the careless use of a dangerous weapon and for poor marksmanship.” He recommended eight years in prison “with intensive training in a shooting gallery.”

This anecdote serves to introduce a matter that has been worrying me for some time. To what extent is the diagnosis of crucial issues such as the teachers’ uprisings through the CNTE Teachers’ Union or the protests of businessmen concerning the liberalization of the economy on target?

It is scarcely probable for a government to achieve its objectives if the premise that motivates its actions or responses is in error. In the case of the interminable demonstrations and protests of the CNTE for example, the government is actually dealing with the consequences of the former corporatist structures that during those times were functional in terms of political stability but that today are terribly disruptive. The current conflict, centered on the matter of teacher evaluation, can, and I believe should, be separated into two facets: on the one hand is found the enormous power base and structure that the organization of the teachers’ union has constructed from the control of basic instances of the educative system in places such as Oaxaca, where it even decides whether private schools are entitled to official recognition (without which a student cannot go on to university). That power base has become a monumental challenge, as tends to occur with quick fixes that appear to be easy but that are accompanied by dreadful consequences in the long term. That is why the federal government’s decision to take over the local education ministry in Oaxaca is so important.

But there is another facet in the specific case of the evaluation of teachers that seems to me widely ignored but not, for that reason, less simple and relevant: the teachers can support or can be contemptuous of their union leaders, but many, perhaps the majority, have a deep fear of failing the evaluation. The emphasis on the rhetoric of the CNTE leaders is precisely on that: on what will happen if they do not pass the examination on the third time at most, which the regulation states as cause for firing. Fear is a powerful ally of corruption.

The systematic rejection of the chambers of industry of any deregulation of liberalization of imports and, in general, of the economy, is equally suggestive. During these last decades there have been various attempts to rationalize the tariff structure for imports, to simplify the importation of merchandise that individual persons or small businesses wish to undertake, or, in straightforward fashion, to submit to competition the traditional industrial sector, that which employs many people but that subtracts productivity from the economy as a whole. The organized business response has been systematic, full of wrath and as visceral as that of the CNTE, although its means are distinct. Opposition to any change is absolute. The question is why.

Some businesses protect their game preserves, as would take place with any interest group in any society; however, it is obvious that the fear factor very much dominates the entrepreneurial response. The prototypical business is not a large business, well capitalized and headed by a person conversant with the international environment, but rather is, typically, a small or medium business owner who decides to do whatever possible to preserve his market niche and survive. Some are successful, others less so, but the majority navigate under circumstances whose rules were established decades ago under the yardstick of imports substitution or, more recently, within the context of the informal economy. Medium-sized businesses in the industrial ambit tend to be closer to the former description, and those of services to the latter. The point is that practically none of those enterprises has focused on specialization, raising its productivity or developing products liable to competing successfully in an open market. The few that have developed their own technological capacity tend to be sub-capitalized and confront tremendous barriers for access to credit or to the international markets.

In this scenario, the fear of generating any attempt to modify the rules of the game is evident. People customarily cling fast to what they know and do not want to change; fear of the unknown can be devastating. The same is true for those who enjoy some product privileged with subsidies or tariffs and fear losing it or those who, pure and simple, take note of the ambit of the most competitive economy and fear sailing an uncharted sea and one for which they have no preparation whatsoever.

The situation of teachers and businesses is, in the last analysis, similar. The majority of entrepreneurs, whether of small- or medium-sized businesses, would probably not imagine that they have something very powerful in common with those who support (or see themselves as overwhelmed by) the CNTE.

Aung San Suu Kyi, the leader of the opposition in Myanmar, once affirmed that “it is not power that corrupts but fear. Fear of losing power corrupts those who wield it, and fear of the scourge of power corrupts those who are subject to it.” Fear is poor counsel because it impedes advancing, but it is essential for the government to comprehend that the motivation of those disputing a change often originates in factors much more easily grasped than immediately apparent.

www.cidac.org

@lrubiof

Luis Rubio

Alexander Woollcott met G.K. Chesterton for lunch at a London restaurant and asked him about his view on the difference between power and authority. “If a rhinoceros were to enter the restaurant now, there would be no denying he would have great power here. But I would be the first to rise and assure him that he had no authority whatsoever”. Thus is found the relationship of the government with the Mexicans: much power but little authority. Authority is won at the voting booth and, later, in the daily exercise of the governmental function.

In Mexico, we have endured decades of poor governmental performance, the product, to a great extent, of a system of government that has come a long way but has ceased to satisfy the requirements of such a large country, diverse and connected to the world. Instead of solving the problems, Mexicans have sought subterfuges for not doing so or, with rare exception, have adopted mechanisms for isolating determined matters (such as foreign investment) from the erratic nature of our governors. Those tools have allowed Mexico to navigate through the problems of the day, but impede the country from taking the “big step forward” toward a new stage of development.

Illustrative of the problem is the fact that we’ve gone on for 40 years reforming different aspects of national life but haven’t been able to resolve the heart of the problematic. With that statement I do not pretend to make little of the reforms that have been undertaken from the 80s on, or to deny the extraordinary advances that have been achieved or to make it appear that it is easy to confront ancestral problems and deeply entrenched interests. The premise is that the objectives cannot be achieved that have been pursued by means of that set of (uneven) reforms without the system of government being modified, because much of what hamstrings the attainment of the reforms and their success remits to the way the political system functions.

For starters, the system was conceived, constructed and administered from the logic of a concentrated power, one in full control of the country and disposed to employ its strength to silence any dissidence, however exceptional such actions were. That characterization of the system was valid for a few decades from the creation of the National Revolutionary Party (PNR) in 1929, but its very success came to alter it. Eighty five years later, the Mexican society in no way looks like that of those former times: its size, diversity, knowledge, international connections and geographic dispersion are radically distinct.

The problem is not that the country could become unhinged from one moment to another but, instead, that it does not emerge from its lethargy, however many attempts have been made of the most diverse types: economic and political reforms, alternation of parties in government, adoption of external mechanisms to confer guarantees and appointing civil servants from the citizenry or from opposition parties to sensitive functions. The transit of the PAN through the presidency or of the PRD in Mexico City are convincing examples that the system survives independently of who is nominally in charge. In this circumstance, it is not by chance that the focal points change but the problems abide. The government that promised efficacy with a persuasive performance record became bogged down immediately when time came to implement its own reforms because there are no appropriate mechanisms for the presidency to interact with the political parties and the state governors but, above all, with the citizenry.

A reform of the power would only work if it were the result of a negotiation not only involving all of the relevant parties, but also the citizenry. That is, in order for it to enjoy legitimacy as well as defenders throughout the country, such a reform would require virtually universal support. In a word, it would have of necessity to be foundational.

Some months ago a politician from the (very) old guard voiced a reflection that could orient the prospective discussion. His focal point was the absence of a clear sense of what could be called “national interest” for purposes of development. He noted that up to the seventies there was the so-called “Ministry of the Presidency” that oversaw planning and budgetary functions, but also the drawing up of laws. The legal director of that entity operated as the nation’s attorney-at large, in the sense that he kept watch over the whole. Although it was a single-party era, the concept that it delineated was significant: when that Secretariat was dismantled, the function of the legal director passed to the Presidential domain and, with that, it changed radically. While previously it had seen to the entirety of the nation and procured the promotion of solid institutional structures, it now became the defender of the interests and affairs of the President. The phenomenon was exacerbated to the degree that the society grew more complex and opposition political parties appeared that refused to accept the presidential view as equivalent to that of the nation.

The politician’s message was very simple: the problems are increasingly complex and cannot be solved with partial measures: there is an urgency to think big, build a new institutional platform that attends to and resolves essential themes that the country confronts and that are the source of eternal conflict: from the electoral to the functioning of the legislature, corruption and torture. That is, it is imperative to construct the institutional structure of the XXII Century, taking a quantum leap that permits forgetting today’s enmities and making possible the consolidation of a modern country that thrives, cares for its population and thinks highly of its government.

www.cidac.org

@lrubiof

                                                                                                FORBES –  Luis Rubio

The incapacity of the Mexican economy to achieve high growth rates has been a theme of controversy for decades. In fact, at least since the seventies, there’s been no government that hasn’t undertaken some initiative oriented toward stimulating growth. Some did this with debt-financed governmental spending, other with ambitious reforms and yet others with stable and reliable financial administration. Although there have been some good years, the fact is plain that growth has been markedly inferior to the needs of the country and to that which the economists estimate as feasible. This year, for example, the two main sources of growth will be exports and internal consumption, both of these the product of the U.S. economy through remittances sent by Mexicans residing there and exports from Mexican manufacturers.

Countless diagnoses seek to explain the phenomenon of lack of growth. Some emphasize problems of security and infrastructure, others maintain the absence of the Rule of Law and of the capacity of rendering that contracts be complied with. I have no doubt that all of those diagnoses are part of the problem, but it seems to me that there is a more profound issue that explains the set of circumstances more convincingly. If one were to observe the fact that the rates of growth of foreign investment are discerningly superior to those of national investment, it is not difficult to explain why: while foreign investment enjoys solid legal guarantees thanks to NAFTA, domestic investment depends on the tenor of the government in turn. The fact that a government holds the capacity to influence outcomes constitutes a highly obvious factor that something is wrong.

My impression is that the underlying problem we are dealing with is that the country is emerging from an era in which the government was constituted from a revolutionary movement and has not stopped acting as such. That is, in contrast with governments emanating from the society or attempting to respond to the society’s demands and needs, Mexico’s derives from the group that won the revolutionary war and that never felt obligated to the population. Fidel Velázquez, the legendary labor leader, affirmed on one occasion that the government “came in by way of arms and will have to be removed by way of arms”. The point is that the system of government has not evolved toward democracy or in the search for forms that allow it to professionalize itself. If one observes the way that the rules of the game (the real rules, not those found in the laws and bylaws) are modified every time a new administration takes office, it is difficult not to conclude that there is a fundamental problem of institutional weakness in the governmental structure.

The problem has become more acute in that the system was modified since the nineties when the first transcendent electoral reform (1996) led the one-party system to become tri-party. That is, Mexican democracy has taken important steps forward in electoral matters, but it has never opened the system in terms of power. What the diverse electoral reforms since 1996 accomplished was to open the system to two new actors, the PAN and the PRD, but without altering the power structure in Mexican society. This is neither good nor bad, except that, aside from incorporating those parties into the power structure, the quality of the government did not take a turn for the better nor did the legitimacy of the system. The fact that the growth of the economy has not improved says it all.

The problem at the core is that the objectives that have been sought by means of that ensemble of (dissimilar) reforms cannot be achieved without modifying the system of government, because much of what impedes the accomplishment of the reforms and their success refers to the manner of functioning (or not functioning) of the political system. The problem of the power manifests itself in diverse ways: in the permanently conflictive nature of the system, in the dreadful quality of governance that equally characterizes the federal government and that of the states and municipalities, in the lack of continuity of public policies, in the question of security, and in the absence of a judicial system that solves everyday problems.

The problem is an obvious one and is manifested in the diagnoses debated in the public arena, but it will only be solved to the extent that the society obliges the politicians to respond or for leadership to materialize that is capable of initiating a modern and functional institutional buildup. The recent elections were a good start, but the challenge is enormous.

www.cidac.org

@lrubiof

Luis Rubio

None of the ills that currently afflict Mexico is especially recent. For centuries, we Mexicans have known corruption, criminality, the wrongdoings of the government, the poor use of public resources and the propensity of diverse communities, above all in certain regions, to rise up and impose their will. If one concurs with these statements, there are at least two questions that would seem pertinent to me: first, what happened in order for all of the above to generate a crisis at this precise moment? Second, if all of this is known, why hasn’t it been resolved? In other words, how is it possible for so many things to have come together over the past few months and from which there appears to be no way out, a circumstance that inevitably tends to stir up unrest and increase the sensation of vulnerability and crisis?

I have been pondering these themes for many months now and meditating on why, but above all how it could be solved? An exchange not long ago in Spain permitted me to see another facet of this disquisition. Spain saw the XX Century in as an underdeveloped country, disorderly, with a bent for hard governments; a nation that exiled many of its best people. However, at the end of that century, Spain had been transformed: it was an ordered country, democratic, fully integrated into Europe and possessing an infrastructure that in quality and quantity does not stop impress. In Spain the combination of leadership, circumstance and geography allowed for an extraordinary transformation; that is, the latter did not happen by chance or by magic, nor was everything that occurred along the way benign.

The contrast between Spain and Mexico could hardly be greater. Although in both nations the population has lived through cataclysmic times, their responses have been very distinct. In Mexico uneasiness, insipidity, disgust with the government and pessimism reign. The economy grows very modestly and problems abound everywhere. In Spain, the economic crisis of the recent years has been highly severe, salaries have fallen not only in real but in nominal terms (that is, many Spaniards earn fewer euros than previously for the same work) and the economy is just beginning to climb. Political effervescence reigns.

Notwithstanding the similarities, the differences are crucial: while in Mexico we suffer from a system of government that not only does not solve even the most elementary problems, such as the security of its citizens, in Spain the quality of the government is extraordinary. The police function, the streets don’t have holes, taxes are paid and people respect the traffic laws. And above all, while the Spanish population can acclaim or reprove the management of each government in particular, the essential part of daily life functions normally thanks to a professional bureaucracy. Contrariwise, in Mexico daily administration is indistinguishable from the government because the key players change every time a new administration comes into power and their criteria are not defined by efficiency or well-being but rather by personal and group advancement. In Mexico we endure a weak government while in Spain there is a strong State that works at the margin of the normal political/legislative conflict that is inherent in everyday political activity.  This became obvious in matters of security with the Chapo’s escape.

Meditating upon this, I come to the conclusion that in Mexico we are experiencing culture shock, while the great success of Spain in the last (several) decades is the product of a cultural transformation. It seems to me that much of what we are living through today in Mexico derives from a frontal shock between the reality and the norms or cultural frameworks that, as a society, characterize us. The problems persist; what’s changed is that now information is ubiquitous.

Although it would be desirable to be able to rely on much better information, for example, of what is taking place when decisions are made in the allocation of resources or how these are spent, what’s relevant is that now it’s impossible to keep information hidden. In fact, the lack of the formalization of governmental transparency exerts the perverse effect of generating rumors and speculations that the technology (the social networks) magnify and render omnipresent. That is, much of what Mexico is undergoing has its origin in the brutal contrast between the discourse and the reality: the expectations that the political culture has shaped in the collective unconscious as well as in the Constitution, on the one hand, and the disorder and deterioration that daily life evidences, on the other. That culture shock has served as a justification of the permanence of the informal economy and the demonstrators’ closing of highways, the absence of effective police forces and governmental corruption. It also explains why Mexicans just laughed when learned about the Chapo’s escape from jail.

Herein the contrast with Spain: that country modernized itself and achieved a seamless cultural transformation. Respect for authority is impressive, as is the quality that would appear to be so trifling as paving the streets. But respect for authority does not translate into respect for the government or the governors: the former speaks to the quality of the State, the latter to the administration of the moment. While we Mexicans know that each government can change the status quo, for good or for ill, in this the Spaniards more closely resemble their partners of northern Europe than us. At the end of the day, what permitted the breaking of the vicious circle was a succession of leaderships that, in combined fashion, transformed their country. But the key lies in that these were annotated by a professional bureaucracy. That’s where it would have to start. It’s not a matter of money but of attitude: the attitude of civilization.

www.cidac.org

@lrubiof

                                                                                                                                    Luis Rubio

There’s nothing more pernicious than arrogance and, worse, when combined with the absence of project and vision. Security in Mexico City is perhaps less serious than in many other places in the country, but that doesn’t make it any less razor-edged or much less guarantees that it will not become worse.

In his History of the Peloponnesian War, Thucydides tells how Themistocles alienated the allies of Athens by extorting money from them. Anchoring his fleet off a small island, he sent a message saying that he had two powerful deities on his side who would compel them to pay up: Persuasion and Force. The islanders sent back a message saying that they had two equally potent gods on their side: Poverty and Despair. In Mexico City, extortion is advancing at a slow-moving but incessant pace, little by little coming to dominate the economic panorama. To the pay-offs extracted by the PRD governors we must now add those of organized crime. This cannot end well.

Despite all that was censurable about the way the previous federal government managed its security policy, there is one merit that cannot be denied: it achieved keeping the cartels outside of the Federal District (the D.F.), blocking them from extending their tentacles toward the political heart of the country. It is no less than paradoxical that the city government of Marcelo Ebrard, which accomplished nothing for security, benefited from criminality not mounting, despite the unassailable political distance that he maintained from then-President Calderón. Now, with the inexistence of a security strategy in the Federal Government, the D.F. has begun to fall prey to extortion, the inexorable initiation of the growth of the narco-trafficking mafias. Paraphrasing Thucydides, the Force of the past could now end up in Despair…

What’s interesting is not that criminality is growing in the D.F., the way that the charging of dues is being extorted, in that the phenomenon has been hammering at the country for years, but the total lack of response by the City Government. Killings increase, extortion proliferates and theft grows in direct proportion to the degree that the municipal leaders and those of the City Government concern themselves with their next jobs rather than attending to basics. Worse yet, many of those functionaries propitiate extortion as a means of financing their campaigns and their deep pockets; corruption has become the modus operandi.  It’s not by chance that impunity has become the norm. The Government of the D.F. is so confident that it presently devotes itself to formulating a new constitution before the foundations of the city would be able to resist it.

This produces a peculiar scenario: enormous and growing insecurity, lousy public services and, to top it off, an arrogant rhetoric that not only refuses to recognize the fact that insecurity is growing dangerously, but keeps talking about historical statistics. The discourse and its tone reveals a local government focused on what’s important (its political future) and disinterested in what affects the citizenry, above all regarding trivial issues such as security, traffic, potholes in the streets and economic development; if to that one adds endless demonstrations as well as formal and “informal” taxes, it becomes obvious there is no understanding of the cost –and disincentive- that exists to creating jobs in the city. In addition, the problem of extortion, a territorial crime, goes hand in glove with the police, whom it corrupts, and ushers in violence because it entails relentless vying for physical space.

Instead of attending to the crime wave that is approaching, the local government has been eager to change the legal status of the city, a matter that appeared to be essential prior to the beating of the dominant party at the polls, but that is absolutely irrelevant for the average citizen. The constitution of the 32nd state sounds good in the discourse, but is highly dangerous for the country as a whole due to the risk that the moods of the local governor -as the cases of Lopez Obrador and Ebrard showed (2000‒2012)- would create a conflagration with the Federal Government, a much more transcendent and touchy issue than what is accepted in public. Why does a government that is not a good government want independence? Might one interject here that its exceptional attention to (and protection of) taxi drivers and other special-interest groups and their capacity of mobilization reveals its true proclivity? Why not better protect the man in the street from the abuses of the City Government, from the delegates, from the police and the PRD, all sworn to extortion, each by their own modus operandi and means?

Instead of getting lost in cabinet resignations, made-to-order constitutions and the protection of interests that make an attempt against the citizenry, the City Government could analyze two successes that are undeniable. The Uber taxi company and the El Torito breathalyzer program are good examples of where Mexico City does indeed work: Uber has afforded the citizenry a safe means of transport that compensates for, at least in part, the shortcomings of the government and its disinterestedness in matters of security. El Torito is a great example of how a space of legality with incentives and clear rules can be instituted. Uber ties in with the objective behind that of el Torito in exemplary fashion: it allows the city to function, its restaurants and bars to generate employment without placing the citizenry at risk of accidents. Both constitute novel paradigms: instead of “regulating them”, the City Government should foster and promote them, converting them into the model of what must be done. The question is, whose side is the government on: the side of the citizenry or the side of the corporatist interests that harass and threaten it?

At this point in time, a little compass wouldn’t be at all superfluous in the City Government.

www.cidac.org

@lrubiof