FORBES – January, 2015

Luis Rubio

It is easy to forget what the Berlin Wall was, its reality and significance, above all because in Mexico’s ambiance it often seems that the wall is still there. In Mexico, the wall was, and sadly continues to be, a great excuse for not solving the country’s basic problems, but also for justifying them and, in practice, perpetuating them.

The fall of the Berlin Wall entailed enormous symbolism: the West had won a great historic battle that had gestated from the moment that the powers divided Europe at the end of WWII. With the opening, the political geography of the Euro-Asian continent was altered, reestablishing German might and bringing the former Soviet empire to a close. Perhaps of greatest import was that the fall of the Berlin Wall annihilated Marxism as an ideology, although it didn’t disappear, especially outside of Europe.

The impact on the fall of the Wall in Mexico was distinct. The Mexican Left and, in good measure, the Latin-American Left, has preserved Marxism as dogma and a lodestar for action. While throughout history, and from much before Marx, the Left has always been defined by its opposition to an unacceptable status quo (such as poverty, inequality or lack of access to diverse types of satisfiers), its persistent proximity to Marxism is significant and revelatory. Marxism provided a unifying and justifying vehicle for opposition to the status quo and continues to be so. For those of us engaged in our university studies in the seventies, Marxism was the backbone of the social sciences. In some places it was learned as a science or as an analytical tool, in others as dogma, but its penetration was practically universal. With the fall of the Wall, the nature of Marxism changed, and with it the disappearance of the financing source for activists useful to Moscow. However, in Mexico Marxism persisted in part because it supplied an explanation for the social reality, but also for the absence of academic options. This fact had consequences, which can be appreciated directly, as well as indirectly, in the failed attempt at bring pressure to bear for a new presidential election at the end of last year.

Of course, the problem is not Marxism or the fact that well-entrenched nuclei of believers are alive and well in Mexico or in other latitudes. The problem is two-fold: on the one hand, within university ambits something very similar to what took place in the economy, where very often there is no competition either. Competition of ideas is one of the most important sources of advancement and transformation, because that’s how knowledge makes headway. To the degree that are no dissident ideas (because there aren’t any or because the environment does not permit them), knowledge stagnates.

The other problem is that the reality had not changed: as long as poverty exists, in combination with the absence of opportunities of participation for generations of teachers, academicians and students, frustration accumulates and permanent foci of extremism are generated. Much of the radicalism characterizing the country has its origin in real factors that derive from the political structure and the socioeconomic reality. Any political strategy that would aspire to attend to the nation’s sources of radicalism would have to recognize the factors that give it life.

The Ayotzinapa Teachers College, to cite the most apparent example, is known as a source of radicalism and it’s not the only one that shares this characteristic. These past months illustrate the absence (historical) of the understanding of the factors that generate permanent social conflict and that, for example, make Marxism attractive as an ideological source and battle strategy. In the seventies, it was combated by violent means (the so-called dirty war), those same means that did not alter the historical pattern but rather secured it.

The true learning from the fall of the Berlin wall is that there needs to be competition of ideas and conditions must exist that make economic development possible. Above all, the great lesson is that both things –conditions for development and rivalry of ideas- go hand in hand and constitute the essence of progress. To get ahead, Mexico will have to change its way of being: it is not by controlling or oppressing that advancement is achieved but instead by generating options for the population’s participation, all within an environment of competition and freedom. This is as valid for the economy as it is for politics.

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Luis Rubio

The world has undergone one convulsion after another during these last years. With the fall of the Berlin Wall, the old mechanisms that (nearly) coerced stability disappeared, which led to that, in general, each nation had to develop and maintain its own sources of stability and adaptability. The Arab Spring is a perfect example because of its very differentiated impact: while all semblance of order in Libya vanished and Syria endured days of catastrophe, Tunisia achieved a democratic election, Egypt reconstructed its old forms and Lebanon emerged relatively intact. What explains the differences and what does that tell us about the disorder characterizing Mexico in the last months and years?

An article and a book throw light on what permits or impedes adaptability in the face of highly volatile political, economic or social processes. In Resilient America, which could be translated as “The Adaptable United States”, Michael Nelson describes one of those anni horribili: in 1968, explains Nelson, the U.S. experienced urban disturbances, the Tet Offensive in Vietnam (the beginning of the end of that “adventure”), the assassinations of Martin Luther King and Robert Kennedy and the seizure  of the USS Pueblo spy ship by North Korea. “Not since the Civil War and the Great Depression, says Nelson, has the American political system been submitted to greater stress than in 1968…” and yet, to a remarkable degree, “the system survived”.

In Mexico we had one of those years in 1994 that ended up causing basic changes in the political structure of the country, sowing the seeds of the deepest financial crisis that the nation had ever undergone and forcing the transformation of the electoral system, eventually giving rise to alternation of political parties in the presidency. Although the cost in terms of legitimacy for the system was enormous, it could be argued that the country survived the crisis because it found the manner of adapting. In this, the contrast between that moment and 2014 is patent: on this occasion, and at least to date, the capacity of adaptation appears diminished if not inexistent.

Nassim Nicholas Taleb and Gregory F. Treverton offer an interesting perspective in their article The Calm Before the Storm*, a text that fine-tunes and brings some of the concepts that Taleb developed in his previous books down to earth: The Black Swan, and Antifragile: Things That Gain From Disorder. In this article the authors have focused on the way a political system administers disorder. Their central argument is that some political systems have the capacity to tolerate tremendous stress, while others collapse prior to the first tensions. The solidity or fragility of a system depends on the institutional structures of each nation.

Nelson deciphers the capacity of adaptation of the North American system at that moment because of its institutional structures (at some point he argues that “Madison rules America”, with this wishing to state that the separation of powers and political decentralization guarantees institutional behavior), as much as because the system-straining forces of discord were unaligned, they had no coherent political effect. More importantly, argues Nelson, the system includes mechanisms of dissention that allow any political force to express itself through perfectly established channels, whether these coincided or not with the government of the moment.

The Taleb and Treverton argument, more conceptual, is that taken at face value, centralization seems to make governments more effective, thus more stable. But that stability is an illusion. Centralization contributes to fragility. Although centralization reduces deviations from the norm, making things appear to run smoothly, it magnifies the consequences of those deviations that do occur. It concentrates turmoil in fewer but more severe episodes, which are disproportionally more harmful than cumulative small variations. In other words, centralization decreases local risks, such as provincial barons pocketing public funds, at the risk of increasing systemic risks, such as disastrous national-level reforms. Accordingly, highly centralized states, such as the Soviet Union, are more fragile than non-centralized ones, such as Switzerland, which is effectively composed of village-states. It would see they are talking about today’s Mexico.

The lesson would seem evident: Mexico is an extraordinarily diverse country in geographic, ethnic, religious and regional terms: While the Secretary of Finance is correct when he asserts that a development plan is required for the nation’s South that is distinct from that which has characterized the rest of the country, the solution that the current government has attempted –concentration of power, therefore concentration of responsibility- has done nothing other than exacerbate tensions. That exacerbation has translated into a disproportionate impact on the federal government, leaving it paralyzed. Instead of rendering it more effective, it has made it more vulnerable, more disposed to systemic attacks, therefore at greater risk for general stability. In retrospect, the chaotic decentralization of the last decade, as it turns out, had the benign effect of diversifying the systemic risk.

The latter does not imply that that is the lasting solution, but it does suggest that the present crisis is the product in good measure of having projected the characteristics of the State of Mexico –no alternation of political parties- to the remainder of the country, an increasingly more diverse and complex nation. Mexico must develop a political model that decentralizes power and establishes clear lines of responsibility, which in serious nations is called the Rule of Law.

*Foreign Affairs, January-February 2015

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Luis Rubio

Mexico’s problems didn’t start in Iguala nor do they dwell in what the government does or doesn’t do. In any case, paraphrasing an Arab snippet of wisdom, the government is guilty of having celebrated “before having the camel’s hairs in its hand”, but that’s an issue of arrogance and not of intention. The great problem of the government is that it doesn’t have a response, a strategy that matches today’s reality in the face of globalization and of an open society that, though far from having achieved democratic institutionalization, is no longer submissive and timorous as it was under the old PRIist regime. The problem is one of vision and perspective.

The government had tried everything: reforms, spending, threats; it has advanced infrastructure projects and cancelled others; it has attempted to convince the world but has ignored the Mexicans. The events of Iguala have not modified the need for action on multiple fronts nor must these events impede much of what has been achieved to date being consolidated and yielding favorable results over time: the case of energy is emblematic. What Iguala did was to give a voice to an entire society that rejects the imposition of an effete and a-historic concept of government.

It has taken the government months to flesh out a response in good measure because from the outset it repudiated the limits imposed by the reality. The government rejects the fact that globalization should impose severe restrictions on its freedom of action because globalization goes hand in glove with the transparency reverberating throughout the orb, the ubiquitousness of information that has empowered even the most unpretentious of citizens and given options to all social actors, beginning with businessmen and investors. The government demonstrated that it can raise taxes, benefit some contractors over others, privilege one private media outlet over other telecommunications companies and jail a teachers’ leader, but it has not demonstrated that it can remove the country from the hole it’s in. In this paradox lies its challenge: negotiating politicians within the legislative and partisan context is not the same as governing.

The first face of the paradox is key: the initial success, constructed on taking refuge in the Pact for Mexico forged among the political parties, incorporated the benefit of making the unobstructed approval of the legislative agenda possible, but at the enormous cost of rendering irrelevant the other parties as functional opposition. Many applauded the political agreement, but few considered its implications. Given the very restrictive electoral regime characterizing the country –this implying that it is exceedingly difficult to create alternative forms of political participation (including the creation of new political parties)- the country experienced the pressure cooker effect, in which dissidence is being manifested by other means, many of these  potentially illegitimate. The marches, protests, torchings and passive forms of rejection, but not thus less effective, illustrate the risk of closing all spaces for dissent and the manifestation of ideas or alternative proposals. Of course this is not exclusive to the current government, but its devotion to controlling and censuring in general, in addition to corrupting the opposition parties (e.g., moches or “sharing” a percentage of each spending program), has had the effect of annulling other means of access and participation.

On the second face of the paradox lies, in the last analysis, the true challenge of proceeding full face toward the future. The country is confronting a basic problem of governance; in a word, the country has not been governed for decades. Inertia has been getting the nation by, crises have been faced in the best possible manner, but no institutions have been consolidated, this meaning rules of the game that are known by all and made to be complied with by the government without distinction. In one word, means which allow the development of a functional society, a successful economy and, in general, a prosperous nation. There has been inertia but not government, and in that the present one is not different.

Governing does not consist of making agreements among politicians or advancing a legislative agenda. Governing is creating conditions for the functioning of society and ensuring that these operate systematically with the objective of making stability as well as prosperity possible. Without order the functioning of the country is impossible, but by order one must not understand the Porfirian (and PRIist) authoritarian dictum under which nothing moves. Order is a dynamic concept that entails an active participation of the society within a framework of transparent rules.

This has never existed in Mexican society. Mexico went from an authoritarian regime in which the rules were “unwritten” to a pseudo-democratic regime without rules and without government. The economy was reformed (at least in key aspects such as public finances and the trading regime) but a modern system of government was not constructed nor was transformation procured for the traditional productive plant with the aim of raising its productivity and rendering it possible to share the success of the development. Both of these things feed on each other: the old system of government pairs up with the old economy and one lives off the other in a symbiotic relationship that benefits very few, while simultaneously making it impossible for the majority of the population to have a viable and productive future. Anchors of stability are urgent that confer certainty on the population and a means of adjustment for the traditional (i.e., old) productive plant.

The great challenge resides in advancing the transformation of both the system of government as well as that of the old economy. These matters are perhaps not as flamboyant and inviting as energy sector reforms, but without them not even a reform as ambitious and promising as that of the energy sector has any future at all.

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Luis Rubio

We Mexicans have confused two very distinct processes that, while at some moment and circumstance could be complementary, can also be contradictory. For it to work, democracy requires strong and effective institutions that ensure participants in the political process of strict compliance with the fundamental rules of political coexistence. In this sense the existence of strong institutions is a precondition for the functioning of democracy. On its part, the strength and viability of any political system depends on institutions. To a greater extent than democracy, the key to political viability and stability resides in the quality and strength of the institutions.

Samuel Huntington, an acute political observer, observed that that there was permanent tension between institutions and democracy; one his many facets of heterodoxy consisted of affirming that there was much more in common between the Soviet Union and the U.S. (this was in the sixties) than between either of these and the so-called underdeveloped countries. In Huntington’s perspective, what placed the URSS and the U.S. on a par was not ideological but institutional; with all of their differences, he asserted, both nations possessed strong institutions, a circumstance that made all the difference.

In the eighties, Horia Roman Patapievici, a Romanian philosopher, stated that the prime objective for any country that aspired to develop itself, “the task is to acquire a public style based on impersonal and transparent rules like in the West. Otherwise business and politics would be full of intrigue”. And he questioned whether Romania’s Eastern Orthodox tradition is helpful in this regard. He went on the explain that Romania, Bulgaria, Serbia, Macedonia, Russia, Greece, and Cyprus – the Orthodox nations of Europe – were all characterized by weak institutions, compared with those of northwestern Europe. He and many others have intimated that this is partly because Orthodoxy is flexible and contemplative, thus tolerant of the world as it is, having created its own alternative order. Patapievici stated that in his country the Orthodox Church exacted an enormous challenge on the growth of institutions because its dogma of the Orthodox Church impeded the development of reliable and predictable rules: he insinuated that the flexibility inherent in ecclesiastical activity rendered impossible the adoption, on a social and cultural plane, of transparent and rules, known to all in advance. From the time I read those words, nearly thirty years ago, the thought came to mind that we Mexicans confront a similar challenge not so much because of the Church but due to the inherently corrupting nature of the functioning of the PRI.

In past decades, the country’s political mantra has been that there is the imperious need to construct a democratic structure as the form of government. With all of its avatars, Mexicans have advanced dramatically (and extraordinarily) in the electoral ambit but have been remiss, not to say incapable, in constructing the institutional scaffolding necessary to make democracy functional. This is not about an ethereal or ideological element: when a political party requests, reasonably and openly, as the PRD did recently, that the electoral authority organize and watch over its internal elections, there is no alternative other than to recognize that, on the one hand, there is a trustworthy and professional authority but, on the other, that no framework exists of reliable rules for direct interaction among persons, groups or parties in the political arena.

For fifteen years from the time the PRI lost its formal capacity of imposition with the disappearance of its legislative majority in 1997, the quasi-consensus among analysts was that democracy had not gelled in the country and that the great misfortune resided in the absence of mechanisms prone to creating legislative majorities through coalitions among the political parties. The experience of the last two years suggests that the problem does not lie in the incapacity of forming majorities (in that the evidence is overwhelmingly in the contrary direction: democracy did not impede the famous Pact for Mexico from making it possible to approve all of the bills that the government wished), but rather in the inexistence of rules of the game (thus, institutions), beyond those that stem from the skills of specific individuals.

The tangible fact has been that the capacity of political operation of the President has demonstrated that the problem wasn’t one of democracy but of the inexistence of ability in prior political leadership. At the same time, the manner in which that immense litany of initiatives –vaulting over all formal procedure in the legislative ambit- illustrates our enormous institutional weakness. In a word, the problem is not democracy but the political susceptibility to the imposition (or any word that one desires to employ) on the part of an effective political operator.

At the heart of the presidential success lies Mexico’s true dilemma: the experience of these times shows a citizenry incapable or unwilling to defend the few (frail as they may be) freedoms and institutions that the country possesses. The PRI has achieved imposing its forms beyond its ranks and no one –parties or citizenry- emerged to defend the formality, the heart of institutional strength. In a certain respect, corruption is nothing other than an indicator of the existence of alternative mechanisms for the solution of problems. In the political conduct of recent times we Mexicans have shown that we are not  “sons and daughters” of an institutional tradition or of the blacks and whites that are the legacy of dictatorial systems: instead, the experience of these times shows that the system of PRIist imposition –interminable grays- has permeated all of society and has made it incapable of defending its basic rights, and this does not, most certainly, a citizenry make.

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Luis Rubio

 My best reading this year was Inventing Freedom: How the English-Speaking Peoples Made the Modern World, a history of the origin of Anglo-Saxon liberalism and its differences with its continental counterpart. Daniel Hannan, English politician and historian, addresses face to face an explanation of the origin of Western civilization centered on the concept of individual freedom. In the political and legal world based on Anglo-Saxon law, the freedom of the individual is the most cherished value and from there the entire system of human interaction is constructed. In contrast, affirms Hannan, in the European version, deriving as it does from Roman law and thinkers like Rousseau, freedom is a concession of the State, thus, the heart of human interaction lies in the regulations emanating from this. What’s fascinating about this book resides in the series of implications that these differences entail for international relations, the different positions that exist with respect to themes such as climate change or property rights.

As if it were the flip side of the coin, Stein Ringen devotes himself to analyzing what power is and how it can be successfully exercised in a democracy. In Nation of Devils: Democratic Leadership and the Problem of Obedience, Ringen declares that power on the side of the governor is what makes others obey commands. What makes them accept persuasion is authority.” A government can have its objectives clear, its structure of legitimacy well constructed and, however, be incapable of modifying the reality when it lacks effective public policies. “Where it stumbles is in making workable policies. Good intentions are not enough. Competence is not enough. When a government has power and can make policy, its next problem is to avoid mistakes. It cannot be done by command, which is only counterproductive, but only by leadership and showing its citizens confidence and professional trust.”

Liberalism: The Life of an Idea is an extraordinarily vivid history of a belief. In contrast with the political use of liberalism as an economic strategy, Edmund Fawcett conceives of it as a belief that evolves but that is sustained on progress, skepticism with regard to authority and  respect for the individual above all else. This manner of understanding the liberal ideal allows him to incorporate not only the Anglo-Saxon classics but also, and prominently, thinkers who do not tend to be associated with liberalism, at least in the way that political debate has distorted it, thinkers like Sartre, Brandt and Kohl. How has liberalism survived? By its enormous capacity of adaptation: in contrast with Conservatives, who fear change, says Fawcett, Liberals welcome it because changing societies are adaptable and stable. At variance with Socialists, who consider that Utopia must be administrated, Liberals seek to create conditions under which each person can develop himself in his own fashion without the weight of a dictatorship. An extremely well-timed book.

Gottland is a book that is extremely strange: an assortment of stories written by a Pole about Czechs. Its success is due to the extraordinary collection of narratives, anecdotes, and tales on how the population, the ordinary man in the street, lived and adapted to the totalitarian system. Beyond these specific stories, what emerges is a photograph, a film really, of day-to-day life under fascism and totalitarianism. Although the book is exceedingly humorous and cunning, what it reveals is a perspective of the human condition when it confronts tyranny and corruption and, despite this, keeps its conscience alive and head held high. On reading this book by Mariusz Szczygiel I thought about how difficult it is to imagine how it is to live under such a weighty shadow and how impossible it is to judge those who lived this way. Its frame of reference is totally alien to Mexicans’ experience.

Steven Levitt and Stephen Dubner have written three books that are exceptionally interesting because of the innovative way that they’ve interpreted situations and tendencies ranging from criminality to narcotrafficking, the college tests, real estate transactions and homeschooling. Crunching the numbers, the authors come to unexpected conclusions (such as that legalization of abortion diminished criminality in the U.S.). The most recently published of the three, “Think Like a Freak”, offers a “technique” for interpreting distinct social problems. The book is an invitation to think differently, to free oneself from prejudice and to measure potential impacts instead of presupposing results without information or analyses. This is a book that proposes a new way of thinking, beginning with the need to admit that no one knows everything, thus eradicating preconceptions. For the authors, the world is not how we imagine it to be and there’s always something new to learn, particularly how incentives make people tick. Its proposal is that to solve problems it is necessary to start out by understanding causes, transcending clichés and asking the right questions.

Milan W. Svolik has written a fascinating study, The Politics of Authoritarian Rule, on the politics of authoritarian governments. His point of departure is that dictators are up against threats from the masses that they govern (which requires authoritarian control), while simultaneously dealing with the elites with whom they govern (which requires parceling out the power). What’s crucial in this is that in a dictatorship there is no independent authority that exacts compliance with the agreements and this comes to be a permanent source of instability.

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

Luis Rubio

Mexican society has never been one to trust its government. At least from the time of the proverb of the Spanish Conquest “Obedezco pero no cumplo (“I obey but I do not comply”), generation after generation has been skeptical of their governors and have trusted them only on exception. Government after government has attempted to win over their trust and, while things worked, that credibility, with all of its potential (and limitations) worked miracles. However, the aggregate of bad governments, crises, unfulfilled promises and interminable stories of governmental arrogance ended up honing a not only skeptical population, but also an exceedingly chary one. On not procuring this credibility, the present government runs the risk of turning out as one of the worst.

Mao Tse-Tung once said that, to govern, one needs an army, power and the population’s trust, but if only one thing were possible, the key is trust. The government of President Peña Nieto never attempted to cultivate or gain the trust of the population and it’s now paying the price of that kismet.

What’s tangible in Mexican society today is dismay, which is the opposite of trust. This dismay springs from many sources, but all, or nearly all, of them derive from what the government has done, or has omitted doing. Due to its action or omission, but above all due to its disdain, the government has generated a multiplicity of victims, conjoined above all with insecurity in its multiple manifestations. Others include victims of governmental decisions in matters of contracts, threats, intimidation or censorship. All discern a critical economic situation with no improvement in sight. Iguala made it possible for the dismay that had already taken hold of the entire society to see the light.

History has taught Mexicans the risks of a government that clings to dogmas with economic consequences for everyone. In addition, a society cloaked in dismay is a society that not only won’t cooperate with the government but also one that perceives the latter as menacing. That’s nothing new, except perhaps for the government, which pretends to ignore learnings from the past.

Although the content of the majority of the reforms of the eighties and nineties was economic, their true transcendence resided in the recognition on the part of the political class that the world had changed. Economic liberalization and all of the consequences of that action in financial, commercial and fiscal matters and for government-owned enterprises was something that the political class did not accept easily, but those reforms betoken acceptance, often through gritted teeth, of that the country could not prosper unless the logic imposed by an authoritarian government were to change. In a word, in the final analysis they accepted the fact of globalization and its implications. To that time, the nation had lived under iron-fisted governmental control in all ambits: from the economic to the media With the liberalization that took place at that moment, and the subsequent steps, the world of control passed on to a better life. From commanding and controlling, the government proceeded to the need to explain and convince. Some governors did this better than others, but all who continued on into the eighties understood that their reality, and their function, had changed.

Not so the government of President Peña, which took office convinced that everything done in the decades immediately past had been wrong and that country should return to its origins. From that premise, the government has joined forces to reconstruct the former world, whether or not in contradictory fashion. One day it liberalizes energy, but the next day it awards Pemex control of the sector; the government negotiates within the framework of the Trans-Pacific Partnership (TPP), but subsequently reinserts controls on foreign trade and wholesale subsidies for entrepreneurs unable to compete. It’s the same on the political front, where its strategy has been to introduce control mechanisms on the media, entrepreneurs and the society in general.

Now that the reality has caught up with us, the government is facing, but not recognizing, manifold grievances and the aggrieved with no idea of how it should respond. Felipe González alluded to this phenomenon on saying that: “Politics has always interested me more than power and I am concerned that in politics the homo sapiens capable of assuming the burden of the state of the dismay of others is disappearing”. The Spanish ex-President understood to a fault that his function was not that of controlling, but that of convincing and, even, shouldering the status of the citizenry’s dismay as his own. Like Chairman Mao, González understood that without trust, no country is governable.

Dismay has taken hold of Mexico and Mexicans and everything appears to indicate that the government’s errors do nothing but exacerbate it. The government may have grand plans and pretensions but the population only asks for certainty and a clear sense of direction. It is possible that, in 2012, bankers and journalists of other latitudes were willing to believe in unfulfilled promises, but Mexicans have the harsh experience of bad governments. The current government has the opportunity of gaining that trust and all it requires is a reasonable plan, a committed team and a willingness to speak and listen to the population. Instead of censorship, which gives rise to infinite rumors, truthful information is required. This shouldn’t be too much to ask for and less so with four long years ahead.

When dealing with vanquished peoples, the Romans were despised for their strategy of “make a desert and call it peace” approach to counterinsurgency. But even the Romans knew that they had to offer subjected populations “bread and circuses” to win them over to Roman rule rather than just brute-force oppression. Mexicans require certainty and clarity; the government requires their trust. These are two sides of the same coin.

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FORBES  – diciembre 2014

Luis Rubio

George Orwell would have understood the contradictory attitudes of Mexicans. In his book 1984 he coined the term “doublethink”, the ability to believe contradictory things. Without doubt, in contrast with developed countries, which tend to be coherent with regard to service provision, we Mexicans are accustomed to permanent contradictions. In the common vernacular, Mexico has a first-world education but the results of tests such as the Program for International Student Assessment (PISA) show that we’re in the fifth; the country is democratic but there are no checks and balances that hinders taking anti-democratic measures; life is hard but the satisfaction is very great.

The Organization for Economic Cooperation and Development (OECD) publishes the “Better Life Index”, a comparative scale of indicators of well-being. In terms of what befalls Mexico for 2013, what’s surprising is how poor the country’s performance is in all of the objective indicators, in contrast with how extraordinary some of the perceptions are. In educational matters, Mexico is by far the country exhibiting the worst performance: a score of 0.7 out of 10 on the PISA scale. However, Mexicans are more satisfied with their lives than the average of countries making up this organization of developed countries: 85% of Mexicans say they have more positive experiences in a normal day (peace, joyfulness, achievement-related satisfaction) than negative (pain, worry, sadness, boredom). The OCED mean is 80% and there are many countries below this.

The numbers tell a different and, concurrently, a revealing story: in Mexico people work an average of 2,250 hours per year, more than the majority of OCED nation inhabitants (with an average of 1,776 hours), but their income is much lower. That is, the productivity of work in Mexico is very inferior and is not compensated by a greater number of hours worked. Part of this is explained by lower educative levels (in Mexico 36% of adults aged between 25 and 64 years have a middle-school diploma, a number far inferior to that of the average, 74%). Other factors involved in this are concerned with the quality of the education, as well as diverse absences, above all related with the availability and quality of the infrastructure.

Maybe the most revelatory datum, but perhaps only surprising for the government, is that in matters of security the score is zero out of 10. Zero. In spite of that, 85% of people are satisfied with their lives. The latter can have only one of two explanations: either those surveyed possess no better frame of reference or there is resignation and acritical acceptance of the reality. Or both. The grand total is not commendable: ignorance, resignation, frustration, fear but at the same time comfort and acceptance.

How can Mexicans, within this context, imagine the construction of a developed country? How can conditions be created to establish in the country vibrant and competitive enterprises or, better still, that Mexicans would begin to create them?

The information era has changed the nature of the world economy and of each country in particular. Before, added value was the physical activity of workers in a manufacturing process. Today, that added value increasingly occurs as a result of the technology, the know-how, rather than its being the product of direct contact with machines or assembly lines. It’s not that the machines disappear but that these progressively depend on computers and software whose operators must have the know-how to manage. That is, the greatest wealth has to do with the creative capacity of persons and their aptitude for managing complex processes, and that’s the product above all of education. It’s not by chance that the greatest sources of economic growth in today’s world concern the intelligent use of the technology, frequently applied to traditional manufacturing processes.

The contradiction with which the Mexican lives in permanent fashion does not contribute to creating an environment that drives the transformation of the factors presently limiting economic growth. Insomuch as the population is satisfied with their life, pressure wanes on the governors to act decisively.

What is paradoxical is that the population entertains extravagant expectations in matters of daily satisfiers, above all with regard to consumption but, save for critical moments, it does not demand  essential satisfiers, such as security or education. Alas, on that depends its success in life.

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Luis Rubio

The discussion on minimum wages is increasingly less realistic and more electioneering. And ever more risky. Of course, our politicians are fully within their rights to propose ideas and set forth their propositions, but that does not make their proposals viable which, despite sounding attractive, are highly irresponsible.

In one of his many brilliant phrases, those that capture an entire world view, David Konzevik affirms that “today, like yesterday, there are the many poor in income. The great difference is that the poor today are rich in information and millionaires in expectations”. What the promoters of the minimum wage increase are doing is stirring up those expectations. What they don’t recognize is that we live in a globalized world where salary is nothing more than a relative price that, in its current condition, maintains political stability. Raising the salary without solving the structural problems lying behind them is nothing other than fostering unemployment, just at the most dangerous time for the Mexican economy in over two decades.

Let us begin with three indisputable truths: first, Mexico is inserted into the global world and a good part of Mexicans’ incomes derive from exports; as evidenced in the crisis of 2009, when demand for Mexican exports falls, the whole country suffers. It is clear that all of us would benefit from a more vigorous internal market, but it is equally obvious that this is not easy to achieve. The country’s true deficit lies in structures stiff in the joints that tether us to the past instead of helping to take a leap forward, just as exporters and the like have already done.

In second place, the price of technology is undergoing a vertiginous fall throughout the world. By definition, the entrepreneur will always optimize the use of his resources: he will utilize the combination of goods that minimizes his costs. Thus, while in the U.S. (with high salaries) a sole individual is left in charge of a parking lot and will utilize a great deal of technology (automatic gates, cash machines, etc.), in Mexico we park in vacant lots, with legions of cheap laborers. That is what produces the relative price of manpower and capital. Altering the equation by increasing salaries could lead to the disappearance of poor businesses or, for the minority with financial capacity, to a technological transformation that would imply the evaporation of innumerable jobs. No trivial matter.

The third reality is that the country is competing with the rest of the world. Independently of the nationality of a company or of an entrepreneur, what counts for seeing an investment through are the advantages and opportunities (or the opposite). Among these it is obvious that factors such as the market (and access to other markets) and installation and operational costs are all key elements for the businessman’s decision to make and investment.

If under these conditions the minimum wage is raised by political decision, the consequences would be the foreseeable ones, while the minimum wage will inevitably produce a fall in the demand for employees without knowledge or capacities that distinguish them from others (in the world) to be in turn replaced by the inputs that has been made relatively cheaper, that is, the technology. This is not a theoretical phenomenon: it is what has been seriously affecting, on occasion devastatingly, worldwide employment levels. The first line of contention, the first who would lose the job, would be precisely workers who engage in repetitive tasks, i.e. most Mexican workers.

Ignoring the impact on employment would imply supposing that there is no flexibility in the labor market: that is, that the demand for workers is equally independent of the salary. However, the current (implicit) strategy in Mexico in terms of both low nominal and real salaries is in a tie with low productivity and its efficiency tends to decrease. The only way to break this vicious circle is to raise productivity in systematic fashion. The federal government has addressed this in the rhetoric but has not produced much concretely. It would be very risky to raise the minimum wage without having resolved the causes of low productivity.

It is evident that there are enormous differences of productivity within the Mexican economy. Each company and sector will entertain distinct possibilities of raising salaries, which invites a rather different solution: to liberalize the control on minimum wages: were these to be freed, some companies could raise the salary immediately; if all are obliged to do this, the result would be unemployment. On the other hand, the unique definitive solution would reside in creating mechanisms and conditions to transform the productive plant, acquire modern technologies and reduce their costs. Of course, such a strategy could only be successful on rapidly and radically raising the capital of persons, that is, their education and capacity to compete. Without that, the quandary would be better employment with low salaries or higher salaries with less employment.

There are numberless mechanisms that the government could activate in order for companies to have greater information and for them to better prepare for competing in this world. Under the current economic, social and insecurity conditions, artificially raising the salary would imply not only an increase in unemployment but also the creation of additional incentives for the illegal and criminal job market that everybody knows lies in wait just around the corner.

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Luis Rubio

“When I visit a country, wrote Montesquieu, I am concerned less with knowing what the laws are than if they are applied”. The Rule of Law is a complex phenomenon not permitting facile definitions. Some presidents affirm that they respect the Rule of Law because they obey the law, never acknowledging that the problem is that a month ago they changed the law at whim. In the famous U.S. Supreme Court case on pornography, Judge Potter Stewart attested that “I know it when I see it”. Something similar could be said of the Rule of Law: when the citizenry lives peacefully because it knows that no one can freely abuse it, the Rule of Law exists.

The Rule of Law has two faces. On the one hand, the power of the authority to manipulate the law at will, which violates the essence of the principle of legality that consists of that the law should be public, known by all and applied fairly. When a governor comes up against effective limitations to his plan of action, the country resides within a Rule of Law.

But there’s another dimension that isn’t small and is that of obeying the law on the part of the citizens: that which makes a citizen obey the law. This is also a key matter, perhaps implicit, in what is related to security, the police and legality.

According to the study of Tom R. Tyler*, people obey the law when they consider it to be legitimate and not because they fear punishment. The conclusion of Tyler, who conducted an extensive, survey-based analysis, is that it’s much more important, and profitable, for a legal system if the population respects it than if the latter feels threatened by the probability of being punished. His principal statement is that the authority’s legitimacy is much more important for people than the instruments employed for trying to make the law obeyed, an argument that stands in dramatic contrast with much of what is utilized in Mexico to combat criminality or tax evasion, to cite two obvious cases. If Tyler’s conclusion is valid, the crucial question is how that legitimacy is achieved.

From the perspective of the authority responsible for making the law obeyed, –and here Tyler supposes a condition of stability not typical of Mexico- what’s decisive is less police surveillance or that by other State bodies, than the behavior of people in their daily lives. One thing is what the letter of the law or regulation says and another is the individuals’ conduct. The theoretical objective comprises there being no difference between both principles: norm and behavior. The question is how to achieve that or what makes it possible.

According to Tyler, much of the legitimacy that inspires and generates a legal system derives from the interaction between the populace and the authority, especially with those directly associated with the legal-judicial process, such as police officers, judges, and public servants. His study shows that people generalize from those experiences to the political system. Were his conclusion equally applicable to Mexico, the implications would be monumental: based on the country’s police officers as the model for evaluating the rest of the government, up to the president himself, the result would be catastrophic, that is to say, like it is.

According to the study, interaction with the authority confers an enormous source of information to the individual. The inferences derived therein frequently become permanent and on that the individual’s perception with respect to the motivations of the functionary is crucial. If the latter is perceived as impartial, devoted to his work and fair in his actions, the citizen perceives him as legitimate authority. Contrariwise, if he/she is perceived as self-interested, incompetent or unjust, it leads the citizen to qualifying the entire political-judicial system as such. Equally important is the perception of how justice is meted out, especially in the case of trials, arrests and decisions in matters of criminal cases.

From this perspective –taking Tyler’s analysis to Mexico-, it’s not by chance that the population condemns decisions such as that of extraditing Florence Cassez to France or that of letting some very visible personage out of jail. Those situations are symptomatic of the conditions to which the author arrives in his study on Chicago: if the population does not believe that justice is being done, it perceives politicians as corrupt and sees the police as committed to their own interests or incompetent in complying with their responsibility, its conclusion with respect to the legitimacy of the judicial system is devastating and is reflected in those paradigmatic cases. It wouldn’t take much to extrapolate that to the whole political system.

The central implication of Tyler’s study is that there is a correlation between the perception of legitimacy people have regarding the authority and obeying the law. If legitimacy is high, people obey; if legitimacy is low, people do not feel obliged by the law and only obey it when the risk of not doing so is too high. Expressed in other terms, legitimacy is crucial for the functioning of a society and constitutes a key strategic factor for a government attempting to advance compliance with the law, in any of its ambits.

Matters such as the energy liberalization and credibility in the government go hand in hand and the point of departure is not commendable…

*Why People Obey the Law, Princeton.

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Luis Rubio

In “The Guns of August”, Barbara Tuchman relates how a series of apparently unrelated events and circumstances led inexorably to WWI and the greatest human carnage that the world had witnessed until then. Will the massacre of Iguala have a similar effect?

This is not an idle question. Over the past weeks, the country has been advancing in an increasingly accelerated manner toward a great political conflagration. Or worse: apparently unconnected events have been aligning to produce a large-scale crisis. What is significant is that all of this has been taking shape in good measure thanks to a presence and an absence. The presence is that of a political project oriented toward putting pressure to bear on forcing the resignation of a president before he concluded his second year in office, leaving no option but a new election.

The absence is that of the government, a bizarre situation given the vast array of instruments of control and the resources, of all kinds, at its disposal. Some parts of the government have continued to function, perhaps out of inertia (such as the stringent grip on the media), but others have been conspicuously absent. The most that the government has achieved is articulating its theory of destabilization, positioning itself not as the leader of domestic political life but as the victim of a plot. Its announcements this week do not change the pattern.

It would be easy to assemble an argument such as that of Tuchman. First, in chronological order, the National Polytechnic Institute (IPN) movement, probably organized by Morena, the National Regeneration Movement, and imperfectly understood by the Department of the Interior, unleashing forces that its promoters never imagined possible. Second, Iguala, the heart of the country’s heroin production; organized crime in the control of the municipal presidency and its strategy to preserve it with the wife of the president in turn; Ayotzinapa controlled by a rival organization, putting teachers-college students in harm’s way. Third, the matter of the presidential residence, which couldn’t have come to light at a more auspicious moment and that elevated relatively frequent events in the country to stratospheric heights. Whoever devised the IPN stand never dreamed of a conjunction of circumstances like those that emerged in the following weeks.

But none of the latter would have come together had the government functioned with normality. It was its absence that produced the immoderate growth of the snowball effect. This is somewhat reminiscent of how Porfirio Díaz responded –or, rather, didn’t respond- at the time. The rebellion appearing in 1910 and leading to his overthrow was the result of Díaz’s incapacity to contain the uprisings taking place in distinct parts of the country. Although the catalyst of the discontent was voter fraud in the elections of that year, each insurrection had its own local cause (abusive jefes politicos, expansionist landlords, shady land deals, cronyism in local government etc.). It is possible that the atrocity in Iguala has exerted a like effect: it became the catalyzer that allowed people to vent their dissatisfaction out into the open, a distinct discontent for each group and individual involve, all of which failed to be understood by the Peña administration, just as it had in Diaz’s time. There were many reasons for the anger, some nearby in origin, others more distant, but Iguala supplied a common element for channeling it.

Alexis de Tocqueville affirmed that the most dangerous time in an authoritarian or dictatorial government “normally occurs when it begins to be reformed”. While the reforms promoted by President Peña have the potential to affect innumerable interests, their impact to date has materialized essentially on three fronts: first, in the modification of the terms of the Constitutional Pact of 1910; second, in tax matters; and, third, in the security ambit. While amending the Constitution has been a national sport, no one had dared to modify some of the sacrosanct articles: 3 (education), 27 (energy) and 123 (unions). The energy reform attacked the heart of a sector of profound believers in the original writ. The fiscal matter is not less significant in that it returns the country to the era of governmental dominance in the economy by withdrawing resources from the population as well as from investors  and businesses, and using them badly, resulting in a very weak economy. Not comprehending the satiation and pain that organized crime brought forth in every family in the country was a monumental blunder.

Instead of building a broad support base that would sustain its projects while simultaneously privileging its court favorites, the government provoked a strange alliance of bedfellows among key actors of the society, including those that support as well as those who oppose the reforms as well as all those that have suffered from the insecurity. The protests of recent weeks are notable for the diversity of those participating in them: anarchists with a variety of face coverings alongside families with strollers and their dogs. The government alienated –and united against itself- its potential natural support base as well as its enemies.

After the fateful date of December 1 (in this respect eliminating the immediate objective of the unruly), the government must begin to reconstruct its project. In an ideal world, it would come together to raise again its objectives, starting with attending to the obvious: the absence of trustworthy institutions, beginning with that of the Rule of Law.

The past weeks reveal that anger that builds up can snowball, like that which Díaz didn’t know how to contain. President Peña could revert the crisis by convoking the entire society to adhere to the Rule of Law, starting with himself.

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