Luis Rubio

As anyone who has sat through a Shakespearean play will attest, the second act can be long and painful, and the hero often faces setbacks. Something like that appears to be happening to the Mexican economy.

The vision emerging from the Finance Ministry is that the country is poised at the threshold of an era of unprecedented growth because it is reorganizing structure of tax collection and is focusing the budget on the promotion of growth. That is, Mexico´s economy is going to grow considerably and tax collection will increase abundantly, arriving at a virtuous circle that will be strengthened with new legal reforms oriented toward achieving the accelerated growth of productivity. Sustained on assumptions and estimates that are nothing if not optimistic, the government is incurring in a growing fiscal deficit (that actually began to grow in the previous sexenio), ignoring both the experience of the decades of crises that the country underwent as well as the international panorama that is deteriorating day to day: oil prices in a downturn, interest rate increases and a slump in the growth of the world economy. In the face of this panorama, prudence might be advisable, above all because once spending takes off it is very difficult to break the ascending spiral: once the base is set, negotiations with state governments start at an always higher levels and projects are always more costly than their budgets. The question is why the government is willing to expose itself to such great risks, given a long history of crises.

One answer is, simply and straightforwardly, that there has been a generational change in the government and a good deal of the human capital –experienced technicians- that there was in the Finance Ministry has been replaced by young people with ambitious political aspirations but, above all, novices who did not live through the crises of the seventies, eighties and nineties. Their willingness to take risks is very superior to that which existed in past decades.

A second answer, not contradictory to the latter, is much more interesting because it illustrates the contrasts characterizing the country. The exceptional analyst and observer Oliver Azuara conducted an exercise that permits understanding much of the economic situation that the country is experiencing, as well as the risks that it is incurring. Were it not for this being the reality through which a population anxious to get ahead is living, the scenario would be akin to a drama penned by Shakespeare.

Azuara analyzed the tendencies of State of Mexico public finances during the last 20 years: “Something interesting that the data suggest is what took place when today’s President Peña was governor of that state. In that period there was a tremendous increase in state revenues without a substantive increase in the debt. That is, they imposed a certain order in public finances and collected taxes, which provided them with a financial margin for infrastructure projects and thus constructing Peña’s presidential candidacy”. The expenditure –above all in public works- was the emblem of the state government at that time but, as Azuara observes, did not imply raising the state debt, which created a virtuous circle. It would appear logical that the same team would extrapolate to adopt that strategy in the federal government.

However, “at the federal level things are not coming out right for them with that formula. The tax-levying capacity –without including the value-added tax, IVA‑ was at its limit and the fiscal reform, although it did increase tax collection, depressed decisions to invest by the private sector”. That is, the federal finance ministry is nothing like that of the states: years of successive fiscal reforms and the elimination of tax loopholes at the federal level has left a much smaller margin for raising the collection of taxes than would be possible at the state level.  The result is within sight: the expenditure grows but growth does not, which implies that a mushrooming debt is accumulating but without benefit in matters of economic well-being. “They assigned the resources before having the tax monies in the coffers… something they didn’t do in the State of Mexico. The amount of resources needed to cover the new expenses will be growing and that is of great concern”.

The two explanations seem plausible: there’s lesser understanding of the risk to which the government is laying itself open and a prior experience for the policy makers that is not translatable into the present reality. The result is an economy that continues to be paralyzed, but now in an increasingly more complex and negative environment both because of the economic situation in the rest of the world as well due to the internal imbalances in which it might be falling.

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Luis Rubio

“Perfect storm” is an expression that describes an event where a rare combination of circumstances will aggravate a situation drastically. That’s what Mexico seems like these days. The total absence of governmental response to the events of Iguala exposed the cesspool, affording the opportunity for all of the resentments, fears, angers and opportunists to come to light. Like the proverbial Pandora’s Box.

Hypotheses abound on what led to the actual moment and the government’s lockjaw, but none explain the reaction of the population. It seems to me that there are two ways to interpret the current moment.

The first brings to mind the beginning lines of Zapata, where Womack says that Zapata’s was the story of peasants who didn’t want to change, and that’s why they ended up in a revolution. Clearly, there are many Mexicans who refuse to change, who want to safeguard their lifestyles, some ancestral and others not so much so. Some want to bring about a revolution. There is also a deep thirst for justice on all planes and it is ironic that it has been the poor who have placed the government in checkmate.

At the same time, the sudden growth of urban violence is an indication of the capacity of manipulation and opportunism of some politicians, but also of the profound discontent in which the country nestles. Burnings of municipal palaces, highway barricades and the attempt to destroy (and perhaps enter) the National Palace suggest a great backlog of anger but, more important, an acute political strategy. These are plainly not spontaneous events.

Another possible interpretation, not exclusive from the first, is that there has been a brutal reaction on the part of Mexican society to the illusory veering back to the past that the present administration has undertaken. It’s not only the population that refuses to change but above all the one that aspires to exactly the opposite: construct a solid platform of development, advance towards a better future and carry out the transformation that so many administrations over the decades have pledged but never delivered. Some prefer to keep the past alive (or recreate their own), some yearn for a better future.

What’s peculiar about the moment is that both groups are incensed, while for distinct reasons. With its actions, the government triggered the current crisis; its inaction has made it explosive. The perfect storm was produced because the government achieved bringing together against it the totality of Mexican society: opposing and dissimilar groups and interests whose sole point of confluence, at least to date, is its rejection of the forms, excesses and abuses of the administration.

Evidently, there is no unique factor that has caused the prevailing situation. For some it was taxes; for others media censorship; for all it has been the unwillingness of the government to face up to the security situation: above all abduction and extortion. In its eagerness to control everything, the government bolstered immoderate expectations that have not been (nor could they be) satisfied. The combination of outrage, resentment and the sensation of having been deceived has generated drastic reactions -some very visible but others no less transcendent- which can’t lead to anything good. The point is that this has given rise to a confluence of circumstances that threatens not only to affect the government, but that entails the seeds of a process of a rapid-fire deterioration.

At the forefront of all this, the government is perceived as lost, in the dark and incapable of responding. If anything is crucial in algid moments like this it is the presence of a government in charge that avoids exacerbation of the crisis. But it hasn’t been like that: in its manner of conducting itself during these two years, the government has been distant and arrogant, an attitude reminiscent of the manner in which the Americans went to Iraq to save that country.  Now that it has engendered crisis, it’s time to act.

The way that the government reacts will have fundamental implications. In concept, the government can respond in two ways: one, recognizing that it has a problem and asking itself, “How can I solve it?” The alternative would consist of responding with “Who did this to me”? The first could lead to the successful confrontation of the challenge, with luck achieving the objectives that the government proposed, even if in different fashion. The second alternative would be to track down the “guilty”, which would lead to the identification of scapegoats, intensifying the crisis, deepening it and risking the government’s own viability. We Mexicans have seen this movie many times before and the last few days have not been encouraging.

The moment is excruciatingly delicate and tends to be inflamed for two reasons: first because the government is MIA. There aren’t responses, there’s not even an attempt at leadership. The other reason is that even in the instances in which the government has responded, its response has been evasive. No government worthy of self-respect can tolerate the National Palace being set afire: however, the present government not only didn’t react to the conflagration attempt of the front gate of the National Palace, but the few individuals who were arrested were freed in a few hours. Sensitivity toward potential police abuse is good, but the distance between evasion of responsibility and anarchy is not great.

As the saying goes, when one is in a hole the first thing to do is stop digging. What’s important today is not who did what but how to get out of the hole Mexico is in. The country and government are faced with ground zero problems and those are the ones that should be seen to.

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Luis Rubio

What happened in the past weeks that changed the whole panorama?  From a government perceived as exceptionally skillful it now conducts itself as if under siege. Is it possible for a single incident, horrific as it was, to transform so many things in so little time? It seems clear that the occurrences in Iguala were not the source of the new reality, but rather its trigger. The question is, why?

In its first year, the government exhibited singular skills for advancing its legislative agenda. Today no one can harbor the least doubt of its capacity for interaction and negotiation within the partisan and legislative context. Where it has foundered is on the plane of the everyday functioning of governing. The paradox, and perhaps this explains a good part of what suddenly changed, is that the promise of the PRIist government was that it knew how to govern.

The first signs of problems manifested themselves in the economic weakness throughout 2013. The difficulties piled up as various bids for public works were declared forsaken, benefiting some groups more than others. Total disdain ensued concerning the consequences of arbitrary decisions such as the card change for payment of highway tolls. Then the annulment of reforms such as the educative presented: all education workers’ contingents that threatened to protest achieved a governmental commitment to suspend the application of the law in their state. The last straw was the matter that most lacerated the population and on which the government had made the most generous promise: that of security.

The government set out from the principle that time was on its side and that its sole presence would solve the country’s problems. Its vision of the economy is that spending is what marks the direction and compels the private sector to act; in the daily operation of the government what’s important are the results and not the ways or the means to reach them; in terms of security, a government with presence creates a balance between the authority and organized crime, thus reestablishing peace and putting an end to the violence. That is, the formulas of the fifties and sixties.

The problem is that the circumstances of those times have nothing to do with those of the present. In the sixties the economy was closed and protected; the government controlled the information and there was explicit collusion among the elite: entrepreneurs didn’t have to compete and nor did they have to satisfy the consumer, union leaders got rich, politicians stole and criminals were regulated. A happy little world. All was not perfection but impunity protected the system’s beneficiaries.

The change took place when the economy was liberalized in the 1980s without modernizing the system of government. In an open economy it is no longer possible to unload defective, high-priced goods on the consumer or to sign leonine labor contracts. With the technological change no one controls the information and each fraud or abuse, of every ilk, is susceptible to appearing in the today’s multiplicity of media and network outlets. Corruption shows.

Even more important, in this era the government is no longer in command. The governor of yore was in control of all of the processes; today’s governor is required to explain and convince. The population has access to the same information as the government and key actors possess infinite options and compare some with others. That world plays under global rules that do not admit the opacity, threats, corruption and complicities typical of Mexican politics at the local level. That violent and corrupt Mexico, inured to remote governors living in impunity, was laid bare in Iguala for the entire world to see: the XX versus the XXI Century. The government will only be successful inasmuch as it creates conditions that make it attractive to invest in Mexico, the same ones for the corner variety store as for the biggest oil company in the world.

The great problem is that the Mexican government has not modernized itself: it’s the same one as fifty years ago; it’s not effective, it’s not institutional and it doesn’t solve problems, starting with the most elementary one, security. This is not the current government’s fault, but it is an unavoidable fact. The government has to be effective: convincing and functioning. Ours neither convinces nor functions.

The government’s great initial success resides in that it changed the terms of the debate over Mexico outside of the country. Its reforms, above all of communications and of energy, galvanized worldwide attention because they opened a new chapter of potential opportunities. The tragedy of Iguala demonstrated that nothing had changed, that it was, in the last analysis, a Potemkin-style montage. Violence doesn’t frighten off investors accustomed to working in Siberia, Angola or Nigeria; what scares investment off is the absence of a government capable of making the contracts complied with. The energy reform is inadequate in this, but what Iguala illustrated, in living color, is that the government doesn’t even have the capacity to make its own rules complied with.

To suppose that the insecurity is going to disappear without police, prosecutors and a judiciary, all of these competent (that is, an effective government), is the equivalent of defying gravity. The result of the lack of congruence between the proposal and the facts was disastrous, above all because of the enormous expectations that had been generated. It’s not by chance that the worst criticism comes from the most panegyric of before, above all in the international media.

Mexico has huge potential, but it requires the government to create the conditions that make it possible.

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Luis Rubio

“To lose one parent, wrote Oscar Wilde, can be considered a misfortune; to lose both looks like carelessness”. Careless or not, one of the laws of life is that the moment will come sooner or later. The loss of a parent, or of an intellectual parent, constitutes one of the greatest moments, and one of the most difficult, in the life of every human being. Some of the deceased’s relatives, of the new orphans, pen profound reflections on the meaning of life, the loss, the transcendence, or the lessons. The majority of those who publish their meditations do it simply to understand.

Philip Roth wrote Patrimony: A True Story about the death of his father and the rapprochement that the final process intimated for both. In an impassioned narrative, Roth allowed his emotions to flow: love, fear, passion, anxiety. On telling the story of his father and his life and context, Roth ruminates on the known and the unknown, the certain and the uncertain, his own experience and what he knew of his father’s. I don’t know whether Roth pioneered a genre, but he surely has permitted millions of readers to be exposed to the disconsolateness that the loss of a parent means, from the miniscule details to the great edifications.

As a religious frequently obliged to offer consolation for his congregation’s pain, Rabbi Marcelo Rittner wrote Aprendiendo a decir adiós (Learning to Say Goodbye), a book devoted to bereavement due to loss of a loved one, not necessarily a father or mother, and his focus is that of the spirit: How should death be confronted? How should the sense of loss be overcome to turn it into a path to liberation? Why me? Perhaps the most profound and simultaneously the least malleable phrase of the book, but also the most transcending one, is that “a life is lost but not a relationship”. The father/mother-son/daughter relationship does not disappear because a life has come to an end, although it does pass on to a new stage.

Héctor Aguilar-Camín has just published his own farewell. In Adiós a los padres (Goodbye to the Parents), Aguilar-Camín repairs to the best of the Roth tradition but goes a step further, turning his own story into a biography of his parents in an attempt to explain to himself why his life has played out in one way and not in another. How can an absent parent be understood? How can the emotions deriving from that absence be reconciled with the parent’s return at the twilight of his days? How can the complexity of the relationships left by that absence and its consequent vacuums be dealt with? With pronounced maturity and emotional integrity, he bores into the grim life of his father, attempting to reconstruct his life and personality, all this in order to explain it to himself and what it implied, and left its mark on, in his own life. In the end, Héctor assumes the care of his father, not because he owes him something but because he is his father and that without diminishing along the way his relationship with his mother, she who cared for the children through thick and thin.

In a somewhat distinct tenor, Joseph Hodara wrote Victor L. Urquidi. Trayectoria intelectual. Although I would not venture to say that that this is about the author’s intellectual parent, the biography, while critical, is a clear attempt to establish a legacy, to give due credit and recognition to the person who had an enormous not only intellectual but also practical impact on the public life of Mexico but whose memory risks being lost in the mists of time, but above all of the low passions and high vendettas of academia. Hodara does more than recount the life of Urquidi: he positions him in the place that he merits as the intellectual father of innumerable personages of Mexican national political life but whose personality left him shelved in the archives of the Colegio de México. The book reads as a “mission accomplished”.

Kierkegaard wrote that “Life can only be understood backward, but should be lived forward”. That is the challenge that the loss of a parent entails. Some meditate on or write down their thoughts and introspections for their own use, others do it publically for all of us to have access to and the opportunity to understand one of life’s greatest pains and the transcendence of the step that signifies the death of a parent. In the end, following Kierkegaard, what this is about is trying to understand in order to live. That’s what Roth, Aguilar-Camín, Hodara and Rittner, each in his own way, achieves in integral fashion. Contrary to what Wilde said, here there are examples of persons who are not careless but who do care for their parents, the biological and the intellectual parents.

In his remembrance on the loss of his parents (Losing Mum and Pup: A Memoir), Christopher Buckley tells a much more political and less emotive or personal story about his parents than the others I mention here, but he composes two reflections that are invaluable: first, he cites the comment of U.S. journalist Mary McGrory to Patrick Moynihan, a U.S. politician. Right after Kennedy was shot, McGrory said to Moynihan “we’ll never laugh again”, to which Moynihan responded “Mary, we’ll laugh again, but we’ll never be young again”. At the end of the day, youth is not gauged by laughter but by the attitude toward life, which leads Buckley to his second reflection: that the death of one’s parents inevitably entails the understanding that one has moved a step up.

The passage through the death of the parents is analogous to Odysseus navigating between Scylla and Charybdis, doing all but the impossible not to be devoured by the one or crucified by the other: the history and explanations on one side, life on the other. These books are truly an outstretched hand.

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Luis Rubio

These have not been the best of days for the President. Difficulties accumulate, the economy doesn’t improve and now there are protest marches everywhere. The issue is not the horror of the killings, although that’s what’s caused the current impasse, but rather the fact that the government has been taken by surprise: as if it didn’t (and doesn´t) understand what’s at stake.

The world is falling all around it but the government has acted under a short-term, tactical logic: to score points at the expense of the PRD; in his speeches, the President does not assume responsibility for security: instead, he solidarizes himself with the victims (taking five weeks to meet the parents) not as the authority in charge but as if he were an NGO, a non-government organization. He reminds one more of Fox with his “and why me” than the calculating politician and expert political operator of the recent reforms.

Days go by and the government doesn’t respond or heed other voices. In contrast with the time of his presidential campaign when he bent over backward to anticipate future criticisms with an ambitious proposal in political matters (at least in terms of making a strong media splash), today the government seems to be clueless. This is the moment to set forth a distinct paradigm because the true problem derives from that the two most important assets that he possessed have been lost: the appearance of efficacy and the initiative.

For a year and a half, the government followed a perfectly articulated script, with competent operators in all key places, an effective communication strategy and an infinite capacity –by whatever means available- for engaging the opposition and clasping neutralizing interests to its bosom. Its impacting capacity of execution met with applause even in the most cautious quarters of society. That’s why its paralysis or incapacity of response today is so astounding, which could lead to the protests proliferating, inside and outside of Mexico. Not a very inviting scenario.

Iguala didn’t inaugurate the problems. For months, diverse, ominous signs have been clear, which were overshadowed by the process of passing reforms. Long prior to the recent slaughters the economy showed signs of paralysis that the aggressive fiscal stimulus hasn´t corrected but the debt is nonetheless on the rise. Oil prices are in a downward spiral, threatening already deteriorated governmental legers, and Europe warns of going into a recession, if not deflation.

Although the security conundrum had been suppressed from the media, the reality continues exactly the same: extortion has become an everyday occurrence for small businesses (and many bigger companies as well), abductions grow and theft does not desist, even (above all) in the entity that the President until recently governed. Impossible to turn a blind eye to this massive, albeit slow, destruction of social capital. The killings reflect the disorder holding sway in the country, the connivance between elected authorities and organized crime and the total absence of a strategy for combating criminality. Iguala is crucial because it wasn’t carnage among narcos: there the State was revealed as a henchman at the service of organized crime. Denying the reality is not a strategy. The President has to take charge.

The reforms project was ambitious in itself. But up until now, there’s been no more than a change in paper. Independently of the new circumstances, the complexity entailed in implementation of the reforms is enormous and, above all, calls for skills very distinct from those that the government has deployed to date. It’s not the same to negotiate with representatives or to buy votes in the Senate as to confront mafias devoted to stealing combustibles or biasing contracts inside government-owned enterprises. The former is political operation, the latter, what’s called governing.

Impossible to minimize the challenge that confronts the government and the country but that doesn’t imply that there are no ways out. Perhaps the greatest of the challenges resides less in the situation in the streets than in the vision of the government. The current governmental thrust reflects a vision that rejects the reality of the external world.  Although, for example, the government actively promotes foreign investment, it doesn’t give the impression of accepting the reality of a globalized world in which communication is instantaneous and decision-making criteria are on display for the entire world to see. The connection between protests in Mexico City and in Rome is real and the impact on investors inevitable. The government cannot pretend to be innovative and modern on the outside while inside there are millions of Igualas a hair trigger away from exploding. In a word, it’s impossible, in addition to futile, to attempt to recreate the old paradigm founded on outsiders not seeing what’s happening inside and insiders not communicating with those outside. It’s urgent for the government to recognize the need of a new paradigm of political development. As simple and as complex as that.

No one expects the President to solve the problem of Guerrero in fifteen minutes. What the population expects from the President is certainty and a sense of direction, that is, institutions which allow Guerrero, and the entire country, to enter into a dynamic of stability and political-legal development that, little by little, would render impossible, or at least exceptional, the existence of mass killings such as those of Ayotzinapa. Such a vision would compel the dedication of all of that extraordinary capacity of political operation to construct a new institutional scaffolding and to oblige the key actors –starting with the governors- to construct government capacity instead of simply “getting by” in order to get rich, without any benefit for the citizenry. This is the moment to act.

FORBES – October 2014

The great difference between the 1994 crisis in Mexico and the one that Spain has been undergoing during recent years lies in that the European country does not have the instrument that made it possible for Mexico to emerge with relative speed from its fiscal and financial predicament. In the Mexican case, the currency devaluation allowed for change, in no time, of the macroeconomic situation. Spain, a member nation of the euro bloc, does not enjoy this freedom. Its adjustment variable has been another, with devastating consequences. This difference is absolutely pertinent for the ongoing discussion on minimum wages.

When a country finds itself in financial problems, as was Mexico’s case in 1994, the economy had to adjust itself to the new reality. In our history of crises, devaluations typically occur because the excess of governmental spending has led to such a growth of imports that an exchange crisis was produced. Once that happened, the government had to act by controlling its spending and attempting to restore the fiscal balance. The main effect of a devaluation is diminishing the real value of salaries, because the latter are denominated in pesos. Spain, which cannot implement a devaluation, has had to lower nominal salaries, that is, many Spaniards now earn a lesser number of euros for the same work: the salary ended up being the adjustment variable.

The minimum wage in Mexico has been the adjustment variable that has permitted the mitigation of the additional costs associated with production in the country such as violence and theft, the bribes exacted by bureaucrats for a company to function, the poor quality of the infrastructure, the costs derived from the need to retrain personnel which did not get the minimal preparation necessary in the formal schooling system and, in general, the poor quality of public services with which Mexicans contend. Given that an entrepreneur has no way of solving the problem of the education or that of the insecurity, to cite two evident examples, his sole alternative is to pay less for the prices that he does control, such as employees’ salaries. The point is that salaries in Mexico are low because if they were higher the whole economy would collapse. Salary is the adjustment variable. This can be unfair, but that doesn’t make it any less real.

The government can decree an increase in salaries but cannot avoid the potential consequence of its action. In quantitative terms, the government can fix the price of a product or service (such as the minimum wage) but cannot fix, simultaneously, the amount demanded. And vice versa: it can fix the demand but not the price. This is about independent variables over which the government does not have simultaneous control.

In the case of the minimum wage, the political logic of increasing it is impeccable. Also impeccable is, at least in some measure, the argumentation that the managed salary has been so low for so long that it is possible that its elevation to a moderate level would not have a dramatic impact. The problem is that measurement of that impact lies outside of the ambit of government control. A 15% increase might not manifest consequences but it is possible that one of 20% would indeed entail these. No one knows beforehand and, given that the proponents’ objective is an increase various times the present minimum wage, the probability of triggering a series of uncontrollable (but certainly foreseeable) consequences is enormous.

The problem of establishing a minimum wage increase by decree is that it is an artificial measure. It is obvious that the country needs to raise Mexicans’ incomes and to do so decidedly and systematically. Given that the minimum wage has become the “adjustment variable” of all of the ills that the economy and the country endure, all of the energy expended on forcing a wage increase by decree should be channeled toward the solution of the underlying problems (i.e., education, security, infrastructure, and so on). Undeniably, there are some themes that, even in the most optimistic of scenarios, would take decades to resolve; but there are others that, with a decided and concerted act of the government could translate into rapid increases in productivity levels. For instance, radical simplification of the fiscal system would change the reality of businesses overnight and that wouldn’t require taking the teachers’ union on or constructing a new police and security system. It’s a matter of priorities.

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Luis Rubio

I haven’t the least doubt that when the Peña-Nieto government was inaugurated, its main consideration rested on how to reconstruct the capacity of action of the State. It’s evident to everyone that governing capacity has been deteriorating over recent decades and that no country can prosper with a weakly government, incompetent and paralyzed, which is also overwhelmed by factors outside of its control. From this perspective, the proposal of an “effective government” that Peña-Nieto uttered during his campaign summed up not only a political philosophy, but a categorical imperative. Now more than ever.

The important question doesn’t reside in the need for constructing an effective government but rather in the causes of its ineffectiveness. One way to see it is to suppose that the government worked well before and that, due to diverse circumstances, stopped doing so. With a diagnosis such as this, what proceeded was to recreate what there was before, with adroit adjustments. But there’s another way to consider the problem: what if the former government was not so successful or not so competent, although some things worked well?

What there’s no doubt about is that the old political system – with its hits and misses- functioned within the context of a very distinct country from that of today: a country much smaller in population, with an authoritarian political system and an economy basically without liaisons with the rest of the world.

In the eighties and nineties, the country embarked upon a process of reform oriented toward recovery of the economy’s growth capacity. With a government still strong and fundamentally capable of administrating political processes, the reforms of those times modified basic structures (through privatizations, deregulation, liberalization of imports). Much change ensued, but the country did not attain raising the growth rate in a sustained manner. On the other hand, the forces that were triggered by that process changed the political reality of the country, creating the plight of the weak government of today, so visible in the atrocities of Iguala.

During that same epoch, the one-time Soviet Union undertook a similar objective, for which Gorbachev conceived a dual reform process: Perestroika would reform the economy while Glasnost would open up politics. Within the Mexican government, the Russian case was much discussed and the government at the time decided that a political opening prior to economic consolidation that Gorbachev was implementing would lead to a catastrophe. In retrospect it’s clear that the Mexican reading of the USSR was correct, but that didn’t imply that the diagnosis of what Mexico was finding fault with was right.

Without proposing it, the new Francis Fukuyama book* describes the Mexican dilemma in laser-sharp fashion. For Fukuyama there are three key components for the ordered functioning of a society: a strong State, the Rule of Law and accountability. He affirms that, although all three are indispensable, none works if the State is weak and dysfunctional. That is, for a country to be successful, it requires a system of government capable of complying with basic functions such as security, the legal system and economic regulation. The sequence, says Fukuyama, is key: countries that democratize themselves before having constructed the capacity to govern themselves effectively always fail because democracy exacerbates the problems and deprivations, eroding the government’s capacity to exercise its authority on finding itself submitted to a surfeit of conflicting demands.

The diagnosis is absolutely clear and devastating. The Mexican political system worked in an environment and within a context that no longer exists and that reality has rendered obsolete. Part of its obsolescence sped up with the reforms of the eighties and nineties, but a reasonable and realistic reading of history would reveal that the problems began much earlier. In reality, the reforms of those years were nothing but an attempt to correct the problems that had been coming to light and accumulating since the mid-sixties. The country’s growth problems date from that period and the political capacity to deal with them exposed its limits in the 1968 student movement, in the economic strategy of the seventies and in the virtual bankruptcy of the government in 1982. Behind the poor economic results lies the poorest of political performances.

A weak government creates a milieu in which growth of the economy is impossible in part due to its own dysfunctionality, but also because it is incapable of solving the problems ailing the country. The dilemma resides in how to resolve the weakness of the State. One way is centralizing and attempting to control all instances and chinks in the armor of political and social life. The government is trying to tap into this aspect, but rapidly finds itself contending with its own limits. A strategy like this exacerbates tensions that later need to be mitigated away with exceptions, creating a vicious circle. That’s what happened with the Educative Reform and with the security conundrum in Michoacán, two obvious cases. Iguala has shown the unviability of the strategy.

The alternative would consist of constructing a system of modern government, one appropriate for the internal and external realities of today’s world. The core change would reside in a distinct vision, in which the objective is government functionality and not control and where political participation is a means and not an objective. The government would professionalize itself, providing the population with certainty. That is, it would entail the recognition that the current system of government is obsolete and requires a thorough transformation. Only then would it be possible to consider its viability and the success of the country in the long term.

*Political Order and Political Decay: From the Industrial Revolution to the Globalization of Democracy

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Luis Rubio

John Lennon once said about the early years of rock and roll, “Before Elvis there was nothing”. Iguala promises to be something much like this for President Peña’s government. What was, was; now the reality sets in. The question is whether this breaking point will lead to a rethinking of the long term strategy of the government or whether it will mark the moment in which it failed, as it happened to so many administrations in the past.

In Mexico’s context, killings like those of Ayotzinapa or Tlatlaya are not the exception or unpredictable. Everyone knows that these things happen and that they’ll continue to happen and that’s the problem: in a civilized country these things don’t happen. That they’re “natural” in Mexico is what distinguishes it and places the government up against a challenge that, to date, it had been indisposed to assume. The pretentiousness that the insecurity and violence would be solved by denying their existence or by making it certain that no information of violence is presented in the media ended up being futile and even counterproductive. Paradoxically, these events are going to be more high-cost for this government than for its predecessor because the latter had no compunctions about recognizing them, not to imply that its strategy was fruitful at all. There is a total absence of long-term strategy that takes into consideration the consolidation of an institutional environment (police, judicial, governments) in which those events do not happen or, if they were to, would be a true exception to the rule.

The unusually long honeymoon that the government had was due in good measure to its extraordinary success in advancing an extensive agenda of reforms that captured the attention of the country and the world. The government evidenced great capacity of political leadership and negotiation within the legislative context, achieving a break with decades of paralysis in matters of economic transcendence. In parallel fashion, it ventured a combat strategy against criminality solely differentiated from that of the previous administration in that it included a political component whose merits have not been exceptional, at least in the case of Michoacán. All in all, the legislative advance as well as a novel tactic in security matters granted the government nearly two years of sweeping and almost fully uncontested latitude.

No sooner had the legislative process concluded than the matter of governing commenced, and from thence it’s been an uphill climb. There’s not the least doubt that the government’s capacity of management and political operation is remarkable, and more so when compared with that of earlier administrations; however, situations such as Ayotzinapa and the failed negotiation with the IPN students evidence the absence of a political project that transcends the mere objective of calming the waters (which clearly has not been accomplished either). That is, there is unmistakable response capacity but no solution strategy for the problems paining the country; worse yet, it is obvious that within the government this is not considered necessary. In Iguala it was clear that the municipal president doubled as a hired gun for the drug mafias; for its part, the notion of negotiating (for example with teachers’ unions or with the Polytechnic students) is the equivalent of conceding the entirety of the demands ended up being counterproductive and otherwise costly. The country demands solutions, not just politics.

Is the federal government responsible for the mayor of Iguala’s second job? Definitely not, but the fact that the narcos are in control of vast regions of the country, impose their law, extort the population, pose a threat to the peace of the citizenry, assassinate at will and submit (or buy off) many state and municipal governments constitutes a challenge to the nation’s governability but, above all, to the idea that a “strong” government is sufficient for the country to progress and gain stability. It is evident that an institutionalized and competent government is required at all levels and not only one characterized by short term management capacity. The government’s opportunity lies in rethinking its project in that direction, but its reactions these days don’t suggest that this is being considered.

Before Iguala the government enjoyed enormous latitude for imposing its style and law. Now it will have to deal with the protests that will doubtlessly beleaguer it inside and outside of the country and, yet more important, with a reality ever subject to deteriorating in the economic as well as in the political. Above all, President Peña’s government has been characterized by a systematic attempt to adapt the reality to its predilections instead of dealing with the reality and trying to mold it little by little in order to reach the transformation it promised from the start. In the political arena it began from the assumption that the problem was one of the lack of efficacy in the way the governmental operated, an efficacy that now is inadequate or insufficient (and which, in any case, has not been achieved except in legislative matters); in the economic arena it ignored the crisis era that preceded the last two decades of macroeconomic stability and is running the risk of leading the country, once again, back to those ill-fated times.

In Iguala the complexity of the country as well as the risk of ignoring the problematic that lies at its core were brutally exhibited for all to see.  It is this, more than anything else, which Iguala changes, without doubt permanently: the before and the after.

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@lrubiof

Luis Rubio

“No problem can be solved from the same consciousness that created it. We have to learn to see the world anew”. That’s how Einstein described the way that problems can be solved. A good lesson vis-à-vis the breakdown starting to be observed in the country today.

Problems are beginning to mount. Some months ago, acting on a multiplicity of fronts seemed to start bearing fruits for the government and some numbers, above all in matters of homicide, appeared to justify its optimism. However, in recent weeks it seems like Pandora’s Box has flown open, deranging the panorama in its entirety. Violence and criminality has earned, once again, a preeminent place in the public agenda and no corporation or entity has gotten off free.

The deterioration was foreseeable in states whose history and geographic location has condemned them to violence. Although horrific, the situation of Iguala is not new. But it is Querétaro that changes the panorama because this is a state that, at least in appearance, had achieved becoming a paragon of order and tranquility. The recent arrest of one of the most sought narcos is not newsworthy in itself: that he had been an active (even distinguished?) member of Queretana society suggests that the rottenness runs much deeper –there and throughout the country- than it seemed.

This leaves Mexicans at a crossroads and the government confronted with the need to revise its strategy. I have no doubt that the policies advanced from the time of its inauguration were conceived as solutions to the problems observed and to the manner in which these were defined. It is now clear that that way of acting is not working. As Einstein argued, it’s time to revise the focus, the whole vision. A vision towards the future is required, not a simple revamping.

Beyond the specific problems and circumstances, the country is up against an array of challenges that are much more extensive than concrete categories. If one wished to itemize these, we would have to include matters such as economic growth, corruption, transparency, democracy, federalism and the unabridged plethora of complexities that characterize the country. Each of these leitmotifs can break down into the parts that make them up or into concrete affairs as they arise. For example, when Michoacán erupted, the government sent in the police, the troops and a politician, each concentrated on attending to specific parts of the general problematic. Months later, it is not obvious that even the most immediate objective of pacifying the state has been achieved. Guerrero is not an isolated case: integral solutions are required.

The real question is whether it is possible to address the problems individually as if this concerned unconnected issues. My impression is that the true dilemma lies between constructing something new and attempting to fix the one already there. Of course, this not about mutually exclusive concepts, but they certainly entail very distinct visions of the present and the future.

A transforming vision would imply defining the construction of a modern nation and from there deducing the nature and characteristics of the institutions and policies that would constitute it. In the eighties Mexicans had something like this: the strategy of reform of that era might have been correct or erroneous, but the vision of a new country was thoroughly understood by the population. What’s relevant here is that no Mexican in that era doubted where the country was going: some might have coincided with the objective, other might not have, but no one was doubtful. That permitted observing the problems under the perspective of a process. Of course, that vision ended up being grander, much more ambitious, than what the system and the government were willing to consider as changes, but the example demonstrates the difference between trying to renovate a building on the verge of collapse and the construction of an entirely new one.

A limited vision for attacking and containing isolated problems can help solve specific problems but, like the village carnival game of pop-up heads that spring up and keep on springing up, there’s no way to bring them to an end or to sort all of them out. Additionally, individual solutions have the effect of producing perverse outcomes in subsequent situations that materialize: they encourage future conflict.

This is about two distinct visions: one of remedying problems, another of creating a new reality. Many of the concrete actions that the government could carry out could be similar in both cases, but the crucial difference would be the what for. In one case this would be about the means for transforming, in the other about instruments of controversy so that everything would go on the same. In the first case the proposal would be to construct a modern country, in the second to maintain the structures of the post revolutionary era, that of nearly one hundred years ago.

For example, in the case of the National Polytechnic Institute students, the question is whether to engage in a dialogue (and cede) to avoid a greater conflict or whether to engage in a dialogue to construct a novel political paradigm. The first leads to ever greater demands, the second brings the petitioners into the political process. All Mexicans fit into one vision, including the students and the unruly Teachers College students, in the other it’s about enemies that have to be annihilated.  In the economy, new protectionist measures are introduced in order to maintain the status quo or could be turned into conditions that create an environment where all, or the majority, of firms can get ahead. In a word, the intention is to construct the country of the future or avoid difficult decisions for the sake of preserving what already exists.

www.cidac.org

@lrubiof

Luis Rubio

The great challenge that authoritarian nations faced in the last several decades was to change the economic and political frame of reference in the world and to transform themselves to achieve the development or, at least, a substantive improvement in the quality of life of their citizens. The dilemma was how engage in liberalization without losing social and political cohesion, and how to maintain that cohesion under economic referents that demand innovation, private investment, systematic growths of productivity, and respect for the capacity of individuals. Very few countries have resolved this well.

Mikhail Gorbachov began by procuring the support of his population resorting to the mechanism that he denominated “glasnost”. His expectation was that public and private discussion (and catharsis) about the past would permit the structural transformation that the economy required to survive and prosper. The so-called “perestroika” consisted of the adoption of market mechanisms to substitute for central planning. In the end, the plan failed: liberalization was not orderly, multiple interests seized the existing assets and the Soviet Empire eventually collapsed.

Carlos Salinas tried the opposite path: economic liberalization to avoid political collapse. The proposal was less ambitious than that of Gorbachov, but his conception was equally intrepid. Economic transformation was sought as a means for resolving problems of growth and revenue but without threatening the political status quo. In contrast to Gorbachov, the PRI survived, but many of the instruments employed for the greatly longed-for transformation entailed the seeds of their own limitations. Privatizations were biased and did not lead, in the majority of cases, to competitive markets at the service of the consumer, and liberalization itself was limited to avoid affecting the interests of the system’s cronies. The poor performance of the economy over the last decades is not the product of chance: it responds to an inadequate plan for liberalization, skewed and unfinished.

China has opted for ignoring the dilemma and its government has devoted itself to organizing the opening, maintaining iron-fisted political control and nourishing its legitimacy with economic growth. The wager of its elite is on that due to its size and millenary culture distinct from the West, it will be able to maintain power in the long term. The literature in this respect is so diverse and contradictory in possible scenarios that only time will tell. But there’s no doubt about one thing: its circumstances are not repeatable in Western nations, thus only a handful of exceptional cases –North Korea, Vietnam, Cuba- have tried it. The coin is in the air.

Spain, Chile and Korea, each under its own circumstances, are nations that opted for breaking with the past and to facing the future. Instead of protecting interests here and there or pretending that what existed could support the transformation that its populations called for from their governors, they decided to change with foresightedness. Each of these countries confronted its own crisis, challenges and conditions but, in the end, the three moved forward. Even with all of their difficulties, none pretends that the past was better.

The present government returns to the old dilemma, but now its focus is equally contradictory. It intends, on the one hand, to correct the errors perceived in the functioning of the markets and, on the other, procures recentralizing the power. Instead of taking the leap ahead to the future by resolving the problems that the past attempt left in its wake, the project is to recreate the old system, although under new parameters. The contradiction is multiple and obvious: compete for investment in international markets but control the private sector at home; declare autonomous entities but attempt to employ them as control instruments; open formerly protected sectors but safeguard the great hunting preserves for prevailing interests. In a word: be modern on the outside but continue being parochial on the inside.

That didn’t work the last time and it will not work now. The country is inserted into the global market but the entirety of the nation has not made the world market its own because innumerable mechanisms persist that impede the markets from functioning, all of which translates into a dual economy that yields dramatically distinct productivities. Some of the obstacles were the product of specific decisions (e.g., the privatizations), but the majority  have to do with the unwillingness of allowing the markets to function, which now adds up to the stubbornness of recreating the old-style presidency. What the country requires is a strong government that preserves security and peace, constructs an effective Rule of Law and makes possible, by means of these instruments, the general functioning of the country. Halfway measures won’t be successful now, the same as they weren’t before here or in other countries. The future must be assumed or Mexico will remain behind.

The question is how and where Mexico will end up. Borrowing from Tolstoy his famous axiom that all happy families resemble each other and every unhappy family is unhappy in its own way, the choice lies in confronting the future to construct a modern nation and undertake the costs and requirements of being part of the world’s big leagues (the happy family) or continue to look for excuses for maintaining (and renovating) the old centralized system that thwarts the growth of the economy, the prosperity of the population and the development of the citizenry.

www.cidac.org

@lrubiof