Luis Rubio

Mexico is suffering the consequences of all of the crises that it underwent from the seventies to the nineties. That is the conclusion that the participants in a discussion panel arrived at on the causes of Mexico’s poor economic performance*. The driver behind this notion is that Mexicans do not believe the government and suppose that no change is going to benefit them because everything is biased toward preserving the privileges of a few (“those of always”). That is, beyond technical issues, behind the paralysis that characterizes the Mexican economy and its very low levels of average productivity, there is a profound distrust of the population in its government and in the institutions. If this conclusion is valid, the reforms that the government has been promoting are not going to resolve anything because that’s not where the problem is.

The analyses and explanations –the alleged “over-diagnosis”- of what ails the Mexican economy are concentrated on matters that are circumstantial as well as structural: the lack of growth of the U.S. economy; the housing industry crisis; the fiscal reform; the excesses of power and attributions that the government is accumulating; the alienation of the business community on the part of the government; the Rule of Law; overregulation; bureaucratic arbitrariness; the lack of reforms.  All of these matters are real and constitute impediments to the acceleration of the economy. However, the conclusion of the panel is that all of this must be seen to, but that the true challenge is that of trust. Back to the future.

This is the summary of what I learned from the panel:

• The economy is growing with enormous rapidity but only one part of it: the modern one. There is an enormous gap in the growth of productivity: while this is growing in some sectors and companies at 6.5% annually, in others it contracts by 5.7%. That is, the average doesn’t tell us anything; thus, it is indispensable to understand the causes the gap. A general policy aimed at fixing one single problem simply won’t do.
• There is a deep bias against the market, capital and the entrepreneurial activity, which is expressed in the most diverse ways.   On the one hand the gigantism exhibited by the monopolies: in Mexico everything is big and the consolidation of great entities is promoted, similarly in the business world as in the worlds of unions and politics. In other countries there are no political parties as big and as powerful nor are there companies like Pemex. It’s not only large enterprises: in all ambits there is an enormous concentration of power and wealth. Even the narco cartels are massive. It’s a political phenomenon: it’s the product of the regulations that exist and not of the size of the assets. Its permanence is at the beck and call of a political decision.
• On the other hand our culture punishes and flagellates the creation of wealth. Deirdre McCloskey affirms that growth is only possible when creation of wealth acquires legitimacy. It is not by chance that in Mexico few want to risk their capital, a requisite of the essence for the growth of the economy.
• The institutional structure is not conducive to growth: there are too many rules for everything but these are not made to be complied with and, when they are, it is in discretionary fashion. Many of the recent reforms (e.g., competition) have accumulated instruments for threatening businesses and investors, conferring vast discretional attributions on the authority. Twenty years ago, with NAFTA, the government committed itself to not modifying the rules of the game for investment. The new faculties comprise a menace to that huge achievement, which explains virtually the totality of the growth of these years.
• In addition to the absence of strategic vision, the content of many of the reforms suggests that there has not been the capacity, or disposition, to understand the nature of the problem, above all its complexity (problems that are distinct in each sector or activity) and a great penchant for amassing changes that entertain neither logic nor coherence. None of the reforms address the creation of institutions that guarantee stability or transparency.
• In sum, at the root of the economic problem lies a yawning deficit of trust. Until this is resolved, everything that’s done will fail to change the trajectory but would indeed have the effect of discrediting the political parties and the traditional politicians, throwing open the door to the populists of before and those to come.

Gordon Hanson, Economics professor at UCSD, has for some time argued that few countries have carried out as many changes and reforms as Mexico and, despite that, have been able to harvest so little. His conclusion is that more reforms, although they are required, will not solve the “idiosyncratic” problems that Mexico faces. Those problems are reduced in good measure to the only thing that the current government has not been willing to do: devote itself to convincing the population and the actors that are key in making growth possible of its commitment to the rules of the game, the permanence of the reforms and the trustworthiness of its project. Along the way, it risks undermining the only thing that had indeed functioned well in the last twenty years: the certainty that businessmen and investors have had (had?) to risk their capital.

Tolstoy was once asked how it had been possible that thirty thousand Englishmen subjugated 200 million Indians. His response was pure logic: “The numbers make it evident that it was not the English who enslaved the Indians but the Indians who enslaved themselves”. Something like this seems to happen with economic growth in Mexico today.

*http://www.wilsoncenter.org/event/mexico-today-1

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 FORBES -Luis Rubio

Mexico is encountering extraordinarily complex and simultaneous dilemmas at present. On the one hand, an economy that for decades has been yielding a performance that in the best case scenario is mediocre and on the other hand, a stale government system, inadequate for the current realities and circumstances and, in any case, ineffective. The most evident manifestations of these challenges are observed in the lack of personal security under which the population lives, beginning with extortion and abduction, very low average productivity and generalized malaise. However much a multitude of reforms has been driven, there is no evidence whatsoever, after a year and a half of government, that President Peña’s government has a clue as to how to solve the problem.

The presidential discourse emphasizes that “we did not come to manage but to transform”. However, after various decades during which it has not been administrated, the country requires a functional government, appropriate for today’s reality. Of course fundamental transformations are required, but it is not evident that those that are driven are the adequate ones, that the government understands what their implementation demands or that there is the willingness to conduct these to a safe haven. More important yet, there is no awareness in the government that many of its actions are in effect the cause of an economic performance worse yet than the historical one.

It is this context within which the legislative discussion is approaching. With regard to the energy reform: many reforms, high insecurity, enormous expectations, inefficient government and an environment of political conflict that does not let up. In the energy theme the gamble is very large due not only to the fact that this could, potentially, free up the enormous resources that the country possesses, but rather because of its potential impact on the entire economy. The legal transformation that the Constitutional Reform of 2013 entails is monumental. What’s not obvious is whether the secondary reform will make it possible.

There are four enormous challenges that have to be solved well in order for the energy reform to be successful: the role of Pemex, the legal structure, the regulator and security. In terms of what Pemex, the industry’s factotum, is responsible for, the question is whether there will be anything left for other potential investors after the legislators –and all of the interests bringing up the rear- have been up to their old tricks. In a conceptual sense, the PRI proposed a modest reform, the PAN demanded a real opening and that was what in essence the constitutional reform produced. Today the struggle is to return to the modest proposal, the two great natural promoters of which are Pemex and the PRD. A reform that permits co-investments with Pemex wouldn’t be bad, but it is imperative to recognize that an unreformed Pemex, now without the paraphernalia of federal controls, would be the cave of Ali Baba and the Forty Thieves taken to its maximal expression. I suppose that not many of the target-investors would be moved to invest in that context.

The second challenge is that of the legal structure that characterizes the country. In order to invest, those potential investors require a legal framework that is clear and transparent. Most important for them are not great incentives but clear rules of the game, because they base their decision on that. Accustomed to investing in Cuba, Indonesia, Russia, Vietnam and other nations with poorly consolidated legal and political regimes, they seek clarity. Mexico’s legal tradition doesn’t offer much certainty in that regard: the law is rare that doesn’t confer enormous discretional powers on the authorities to change the rules of the game at any time. Strike two.

The third challenge is that which is relative to the regulator. In the same way that the potential investor requires certainty in the rules of the game, its main source of confidence lies in the regulator. A regulator perceived as independent and capable of enforcing the rules established in the law is the only way that investors will be willing to participate in the process. To date at least, it’s not obvious that the legislation will produce a reliable and independent regulator. There aren’t many of those in the country, thus this prerequisite paramount to invoking Sisyphus and his great stone.

Finally, the great problems of Mexico aren’t the drugs or the imports or the public expenditure. Mexico’s problem is the very poor quality of its government. The insecurity is the product of that circumstance and the decreasing popularity of the president is nothing more than a manifestation of this. Without functional but delimited government, the country will continue losing its bearings, albeit with a president infinitely more capable a politician and executor of legal changes.

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Luis Rubio

Déjà vu, the illusion that results in remembering a previous world. That appears to be the logic of the economic policy: recreate a world that no longer exists and that is no longer possible. But the attempt entails enormous costs and risks, beginning with the illusion that it is possible to separate and differentiate the external from the internal world. Globalization of the productive processes transformed not only the manufacturing of goods but also the political relationships among society’s actors. Unless the government is willing to emulate North Korea or other repressive dictatorships, its margin of action is infinitely smaller that it thinks.

A half century ago, the overwhelming majority of human activity took place within an earmarked territorial space. An entire automobile was manufactured at one plant from raw materials. That productive schema went hand-in-hand with systems of government with responsibility and full sovereignty over their territory. The regulations and mechanisms of supervision and control ignored what went on outside the country: that was of no relevance. In the political arena, governments of that time exercised absolute control and frequently censured information published in newspapers, books or in the electronic media. With regard to the economic, the government established regulations that were generally oriented toward protecting domestic producers and fostering the growth of economic activity through investment in infrastructure. It wasn’t a perfect world but it was without a doubt a government’s and politician’s paradise.

That world folded with the development of so-called globalization that, in essence, consists of the integration of productive processes across borders. Instead of an automobile being manufactured at a sole geographic site, today there are factories of car parts and components, each more specialized than the other. Following the logic of productivity, this permits the quality of the components to rise, creates economies of scale and scope and reduces costs. Specialization has translated into better automobiles that break down less and that last longer. The same is true for electronics, furniture, computers, pharmaceuticals and so on.

The change in the way of producing brought with it an alteration of political relations. With the inveterate crossing of borders that globalization entails, the rules of the game changed. Instead of controlling or regulating investment (e.g., Echeverria’s 1973 law on foreign investment) today investment is desperately sought out. Before power was rooted in the government: today in the company that possesses an infinity of alternatives for localizing its investment. Governments were required to update their regulations and ways of conducting themselves in order to compete for investment, offer it a king’s ransom and trust that the benefits bestowed would translate into jobs, the generation of wealth and better opportunities. From entities solely devoted to control, governments became promotional offices.

That affirmation may seem excessive but, at least conceptually, it is far from being so. Everything that the Mexican government has attempted across the last three decades responds to this logic: how to attract more investment. For that, numberless adjustments have been made in laws and regulations, free trade agreements have been signed, promotional offices for investment have been established (e.g., Proméxico) and the president has dedicated infinite time to courting potential investors. And the ministers and governors, much more.

It is clear that the traditional politicians don’t like this reality, but nothing better illustrates its validity than the recent behest of the PRD president to potential investors in energy that they had better not come near Mexico. What’s impacting in this is that the statement was made in Washington: were the government thought to be in control of the process it never would have occurred to him to speak like that.

The loss of power on the part of the governments with respect to markets, investors, enterprises and cosmopolitan actors is an inescapable reality. That transfer of power is not only to international actors (for example, multinational companies) but to all of the economic actors integrated in the global world. This circumstance renders inexplicable the manner in which the government has tried to differentiate between foreign and domestic investors, not to mention the citizenry in general.

Much before being elected, today’s government had devoted great efforts to cultivating investors and media from Europe and the US, even coming to articulate or promote the expectation of a “Mexican moment”. What’s paradoxical is that that effort (that persists) has gone hand in hand with a conscious strategy to ignore, reject and lash out at Mexican investors and citizens, as if in this era of instantaneous communication those actors would not be communicating among themselves all the while. The pretense that it is possible to differentiate between the internal and the external is a costly (and risk-ridden) illusion.

The connectivity inherent in globalization makes everything relative and that the population will only be satisfied to the degree that it is better off than others in the world. The absolutes disappeared as did the viability of the government that imposes upon them. Today what’s necessary is a government that constructs and exercises positive leadership. Today the government depends on economic actors and citizens, not the reverse. Pretending that it is possible to return to the past is an expensive illusion.

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Luis Rubio

What does the most recent electoral reform tell us about the future of the country? It was doubtlessly a great success for the legislators of the three big political parties to have achieved resolving differences that had seemed impossible to work out. However, the fact of approving legislation does not imply it’s constituting an improvement over the existing one or that its implementation will improve political life (why speak of well-being) of Mexicans. The new legislation reminds me of an exchange that Alice (the Wonderland one) sustains with the Cheshire Cat: Alice: “Would you tell me please, which way should I go from here?” CC: “That depends a good deal on where you want to go”; Alice “I don’t care much where”; CC: “Then it doesn’t matter which way you go”; Alice “… so long as I get somewhere”; CC: “Oh, you’re sure to do that, if you only walk long enough”. Different from Alice, it does make a difference to us Mexicans where the politicians lead us and the road they’ve chosen does not augur at all well.

There are many details that the new legislation incorporates in procedural as well as in financial matters of the campaigns that are praiseworthy. However, what are worrisome are not the details but the whole. In contrast to many critics, it seems to me that there should be an option of independent candidates, but the law should not promote them because in a split second we’d end up with a world of opportunists. Expressed in other terms, were an aspirant to the presidency unable to get 780,000 signatures he’d better not even try. On the side of financing political campaigns, Lewis Carroll, the author of Alice in Wonderland, would never have never been able to imagine the Surrealism that characterizes Mexican politics: all of those who voted for more restrictions and controls in this matter know perfectly well that they will be the first to violate their precepts in the next campaign. Instead of transparency, they opt for opacity, corruption’s little sister. The case of reelection is even more pathetic.

What is specific in the law entails some advances and some setbacks, but the general tenor is one of denial of reality and human nature. In 1996 electoral legislation was achieved that opened up opportunities for political participation, delineated the possibility to construct a democratic polis and placed the citizen at the heart of Mexican politics. It wasn’t a perfect law (no law is), but it constituted the end of an epic struggle to break the monopolistic control of one party over national politics.

From then on, all subsequent reforms have gone in the opposite direction. If one analyzes the details, each new version entails greater restrictions, controls and impediments. Each of the versions is more ignorant of and distant from the political realities and from human nature: each restriction invites surreptitious responses that do nothing other than negate the purpose of the legislation. The details tell us that politicians and political parties attempt to resolve basic differences by means of rules that are inapplicable in real life. But what’s paradoxical is that this way of acting has the opposite effect to that desired: instead of strengthening credibility in the political processes and conferring confidence on the citizenry as to the veracity of the results, what is achieved is greater disbelief and distrust in electoral processes as evidenced by surveys.

The reason for the latter is not difficult to elucidate: the details responds to specific problems, particular crises, previously experienced suspicions and situations that the new law attempts to resolve or at least attenuate through an ever greater number of articles in the law.   But, clearly, the general purpose is not to resolve but rather to reinforce the three-party oligopoly that Mexican politics has become and in which competition is no longer important (as it definitely was in 1996) because it has been replaced by clientelism, appropriation of monies and the eternal permanence in power. The world of transfers from society to the individuals in power.

Between 1997 and 2000, when the PRI lost its perennial congressional majority, the opposition parties made a big fuss about the new reality, but it was not greatness that exhilarated them, but vanity. In their speeches in response to the annual Presidential Address to the nation, Porfirio Muñoz-Ledo (then of the PRD) and Carlos Medina-Plascencia of the PAN presented themselves as young upstarts attacking the institution of the presidency and claiming equality of powers. Offensive in their style, they at least evinced a bid for opening and frank competition. Today no politician could be encouraged to deliver a similar speech: the offensive ones have become permanent, but now none bets on an open and competitive system. Parties and legislators have become one more of the many monopolies that they so scathingly criticize in other ambits.

The issue becomes even more serious when one compares what has been achieved with the country’s true challenges. The political problem is not one of financing campaigns or electoral authorities but rather one of government. The country stands in need of basic governance in many regions and the general nature of the government is, needless to say, mediocre. Legislators concentrate on straggling little reforms, instead of constructing an effective political system that allows for the development of a system of government likely to confront the problems of security and economic growth, the two issues that really matter to the citizenry.

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Luis Rubio

Mexico’s main economic problem, says the PAN President, is   its political system because it has impeded it from making the decisions and undertaking the reforms that the country requires. No one who has observed the way Mexico functions would object this appreciation that, not by chance, coincides with the disposition of the three political parties to come together in what is known as the Pact for Mexico, brokered by President Peña upon his inauguration in 2012. The Pact permitted many necessary changes, but the country’s real problem lies elsewhere, in the reality of the power.

The great question is whether the problem resides in that the existing procedures do not serve for the processing of decisions or conflicts (thus the Pact), or in that the existing institutions do not work because they are extremely weak and vulnerable. This dilemma is at the heart of the country’s apparent incapacity to construct long-term projects, to attract investments in projects and sectors entailing trans-six-year presidential terms, and that confer certainty on the population with regard to the functioning of the system of government, all of which are critical in view of the potential energy liberalization. The problem is one of recent decades because in the remote past the country was very distinct: closed, small population, little information and a self-contained economic structure.

Not by chance is Mexico confronting challenges in ambits as distinct as security, the composition of the regulatory organs (competition, telecommunications, transparency, energy, elections) and the secondary legislation regarding the constitutional reforms undertaken this past year. It’s not that things have gotten worse but that they haven’t been attended to in a consistent manner. Each of the reforms undertaken has its own merit and purpose, but each can only prosper to the extent that the reforms satisfy two generic criteria: one, that they guarantee trans-presidency continuity; and two, that they truly “attack” the heart of the problems in the respective sector or activity.  Neither of the two is evident.

The problem of continuity derives from the concentration of power: the concentration is so thoroughgoing and the capacity of the governor so great for modifying the correlation of forces that the natural inclination of every incoming president leads to ignoring what exists and to constructing something totally new. Some governments decentralize, other centralize; one administration proposes a determined police model, the next one reinvents it. The point is that there is no continuity, a factor at the core of the country’s institutional weakness.

In plain terms, the degree to which a government can modify the content of the institutions at will is the extent to which the institution is incapable of fulfilling its mandate. Perhaps there is no better test of the latter than the fact that the members of the commissions charged with key processes such as elections, transparency and regulation (competition and telecommunications) are changed periodically but not when it’s their turn: these changes have the effect of sapping the institutions because they evidence the nonexistence of real autonomy. Insofar as neither the society nor the members of these entities are certain of their permanence, they will act with incredulity or with rejection, corruption or accommodation.

Over the past few months an enormous number of entities were created with supposed constitutional autonomy, a term that still remains to be accurately defined. I understand that the objective of those advancing this notion responded to the urgency of strengthening the State’s capacity, distinct from that of the government, in such important and sensitive areas. The question is what will be sufficiently distinct on this occasion to justify the certainty to which the reformers aspire. In other words, how are they going to guarantee the permanence of the trustees (or their equivalent) and ensure the independence of their decisions? It’s not a simple issue to resolve given the propensity to modify the institutions and their boards, including the lack of respect toward these, both the product of the reality of power.

At the heart of this problem lies the plain and simple fact that things happen, in this case the capacity to modify alleged autonomous institutions, because those bringing about the modification have the power to do so. No two ways about it.

In general terms, in countries in which “the leap was taken” toward institutionalization comprised a product of the vision of one person (or of a small cadre) who recognized the cost of the absence of solid institutions, prone to granting permanence and reliability to their own projects. That is, the move towards institutionalization was due as much to convenience as to conviction. Case after case, from the Ottoman Empire to the end of the last Chinese dynasty and passing through numberless examples (such as Korea, Taiwan and Chile) and, in recent decades, some Eastern European nations, institutionalization has been a product of the vision and willingness of the governor to utilize his vast power in order to delimit it. Institutionalization does not occur because it is decreed in the Constitution but rather when the governor himself accepts that the future requires putting a rein on his own power in order to submit it to processes not depending on a sole individual. When that happens, the country segues to another level of civilization.

Mexico’s great challenge does not lie in the definition of procedures (although that’s indispensable), but in the decision of the government to constrain its own power for the sake of endowing its project with permanence and, as a result, laying the foundations for a sustained development. That’s impossible with the status quo.

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Luis Rubio

Groucho Marx, the great satirical actor, argued that “politics is the art of looking for trouble, finding it everywhere, diagnosing it and incorrectly applying the wrong remedies.” Governments are particularly good at identifying technical problems but they tend to be profoundly ignorant about what motivates people to act the way they do. They assume that people will respond to governmental commands and preferences without question and without ever doubting bureaucratic altruism.
But Mexicans have spent centuries watching governments come and go and their response has not changed one bit: “obey but do not comply” was the way Mexicans defended themselves from their Spanish masters during colonial times. They simply adapt. Human nature is stubborn but predictable: people never go against their interests nor do they willfully bow before bureaucratic preferences. Maybe it is there where a more logical explanation to the pathetic economic performance of late resides.
I do not have complex mathematical models at my disposal to elucidate the causes of the poor performance of the economy, but I observe how people act and respond to the endless barrage that comes out of the government in the form of standards, rules, procedures and taxes. One comment I heard recently tells me a lot: the use of cash is growing rapidly. A notary-lawyer tells me that in the past few years cash had almost vanished from the transactions he witnessed and gave faith to (largely due to the tax on cash deposits) but that it is now coming back in dramatic fashion. The reason? People are afraid of the new powers of the Treasury to audit their bank accounts and credit cards. Thus, instead of moving towards an increasingly efficient economy and a financial system that intermediates ever more exchanges in the economy among economic agents, Mexican are moving back toward barter. Lower efficiency means less economic activity. If one multiplies thousands or millions of daily exchanges like this across the country, it becomes obvious that the aggregate effect can be brutal.
The rationale of a higher tax rate (approved last December) is that, with a much larger purse like the Treasury’s, the government can spend massively, with impressive results: a huge infrastructure project trumps thousands of small exchanges any day. However, this may be true in Sweden, but in Mexico even the construction industry is shedding jobs and declining. Public spending is rising but the economy is not responding. Surely, months of sustained governmental spending will eventually impact the economic activity, but probably less than the government anticipates and perhaps in different ways. The reason is obvious: government spending is highly inefficient. While people spend in ways that are profitable to them, the government wastes a lot, often absurdly. Furthermore, corruption is not abating and everyone knows examples of it in their daily lives that reinforce their contempt for bureaucratic solutions: rigged bids; abusive unions; vote purchasing in Congress; infamous forced contributions (“moches” i.e. bites) to the members of Congress by beneficiaries of public spending; and extraordinarily generous pension schemes for public servants.
Instead of seeking to earn the trust of the population and moving towards building an increasingly efficient and orderly economy, recent governmental actions are accelerating the growth of the informal economy, whose taxes are privatized: these are charged by inspectors, police officers and political leaders and never reach the Treasury. Instead of simplifying tax compliance and lowering the costs and complexity of creating and operating formal enterprises, the tax strategy increases incentives for the informal economy where, despite everything else, businesses face lower administrative and fiscal costs and operate outside of the government’s radar. The logic of the informal businessperson is impeccable but its overall effect is to reduce the aggregate growth of the economy.
Above all, the daily reality for the average Mexican is still very onerous due to the costs of extortion, the impunity with which the authority acts at all levels of government, and the disorder that is the trait of the government at large. The notion that people are going to become orderly without the government doing the same contradicts human nature. Example begins at home.
The current tax law dramatically increases the fiscal cost both because in Mexico there is no marginal tax (tax is paid at the whole rate in each bracket) and because the new powers of oversight paralyze consumption and investment. In these circumstances, it isn’t difficult to explain the economic situation. The problem is not technical but of human nature. In the seventies two administrations endeavored to impose their bureaucratic logic on daily life: they invented trusts funds and increased government spending as if there were no limits and ended subverting the trust of the people. The result was financial crises, inflation and chaos. People did not respond (or responds today) as the bureaucracy expected.
At the heart of it all lies the inexorable contradiction between the experience of the people and the willfulness of the government. In the foreword to the book entitled “Arms Trafficking in Mexico”, by Magda Coss Nogueda, Leonardo Curzio tells the story of a discussion between Rivera and Siqueiros in front of Pablo Neruda, the famous Chilean poet and Nobel laureate, where both Mexican muralists drew their guns to try to impose their views. That seems to be the logic of the new economic strategy: to impose instead of convincing, authority rather than leadership. Imposition does not work in the era of globalization where investors have the world to choose from. The country requires order but also attention to the little big things, such as security and stability. People entrench themselves and, in their ancestral logic, pretend that they comply. The inevitable result is reduced economic activity, regardless of how much the government spends. Where does the fault lie? Quite obviously, it lies in the people and the businesses that do not heed the government’s instructions.

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Forbes – May 2014

 Ari Shavit, a shrewd Israeli journalist, notes that “the West Wing of Barack Obama’s White House is different than any other West Wing before it. It’s full of young people and women, blacks, Hispanics and gays. There’s hardly a white middle-aged man to be seen, almost no people who personify the old political structure. Two women conversing in sign language tell the whole story —this administration is one of minorities and liberals committed to equality, freedom and social justice. The power is a gentle one, of a government reluctant to govern. The new America, which came here five years ago, has become the first America”. Shavit’s argument is that, from that strategic position, everything that seemed to outside observers obvious and natural before no longer exists and that which they find obvious appears to the insiders like the era of the dinosaur.

It is within that context that one must understand the rationality of the Obama White House in the face of critical situations, some of enormous transcendence for Mexico, such as the crisis in Crimea, free trade negotiations in the Pacific and in the Atlantic or the altercations between the executive and the legislative branches in budget matters and debt. In each and every case, the assumptions that used to prevail among the relevant actors and that would transcend the party dwelling in that proverbial house have stopped being valid. Obama is a different kind of president.

Two years ago I wrote an article that I entitled, in an absolutely provocative spirit, “Obama and Echeverría”. My argument was that, like our beloved ex-President, Obama was altering the established order of his country. Today I have no doubt but that this has been his spirit but due less to his skin color than to his ideological stance. Everything indicates that in his development the lessons from his mother (rather than his father as his book’s title suggests), a radical leftist, his life in Indonesia and his evolution as a constitutional law professor and social activist were much more important. Each of those facets, as occurs in each of us, gave rise to his ideas and positions. Perhaps what is most notable about his view, which is in contrast with that of his predecessors in the U.S. government, is that he views his nation’s military might with disdain and believes that it is possible to settle any conflict through discourse.

Nothing bad about those characteristics, except that they haven’t had the desired effect. The U.S. hasn’t had a budget in five years, the economic stimulus program was inadequate in good measure because of the way decided upon to spend it (jurisdiction was ceded to Congress, which employed it with a relatively small multiplier effect), its vacillating over Syria, Libya, and Iran to only later not act according to its own design (the famous “red line”). The case of Crimea may well have been inevitable due to the strategic logic of Putin’s Russia, but the fact is indicative of the perception of weakness about Obama that there is in the rest of the world.

Some days ago, U.S. ex-Secretary of State James Baker stated with respect to Crimea that it perhaps would have been impossible to stop the Russians, but that the response should have been much more drastic and immediate: to authorize the twenty-something liquefied natural gas projects that have been brought to a halt by Obama. Baker’s point was that the mere authorization would have unleashed the financial markets, immediately shrinking the value of Russian oil assets. The two responses –that of Obama and that proposed by Baker- are desk top positions that do not entail any military mobilization, but the latter distills a profound strategic vision, by a professional, while the cancellation of a few visas and other similar provisions have no bite to them and irradiate tepidity, the telling sign of  an amateur.

Conceivably the best analysis of the crisis in Crimea was written by Anne Applebaum: “Openly or subconsciously, since 1991, Western leaders have acted on the assumption that Russia is a flawed Western country. Perhaps during the Soviet years it had become different, even deformed. But sooner or later the land of Tolstoy and Dostoevsky, the home of classical ballet, would join what Mikhail Gorbachev, the last Soviet leader, would so movingly call ‘our common European home.’ For the first time, many are beginning to understand that the narrative is wrong: Russia is not a flawed Western power: Russia is an anti-Western power with a different, darker version of global politics.”    Obama has no idea of how to respond to that and his loss of leadership, clout and popularity reflect it. But, in the interests of maintaining a sense of balance, in contrast with Echeverría, his capacity of harming the interests of his country is infinitely less: in the U.S. there is no crisis such as those that in Mexico broke out without warning. For that there are in Washington counterweights that work with immense effectiveness, even if not always pretty.

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Luis Rubio

There are occasions on which the youth of our political system makes itself more than evident, and I refer not to the age of Mexico’s incipient democracy but to its adolescence, if not its childishness, with respect to the criteria and behaviors that feed it. Mayoriteo (the passing of a bill by the simple majority of one party), consensus and democracy inside the political parties are three of those myths that do nothing other than show how much more Mexico must yet advance. The show that the PAN put up recently in its election for the presidency of the party should lead us to tears because of how pathetic Mexico’s moment is in terms of civilization. What will be the consequences of that immaturity?

The demand for consensus with respect to the approval of legislation in Congress comprises the most pathetic part of this childishness. A self-respecting democracy would not require more than one vote above the rest to pass a law. In Mexico, however, politicians, parties and commentators demand unanimity. The syndrome is so deeply entrenched that the government is willing to squander millions of pesos on the approval of laws that wouldn’t have required more than the vote of their own contingents and acolytes. As the saying goes, fear is swift to strike.

Mayoriteo, what PRI was historically criticized of doing (passing legislation on its own and regardless of what other political parties wanted) is one of those burdens that from decades past have now served to set a trap for the PRI. Demanding unanimity or consensus, opposition parties and many critics have achieved intimidating the PRI and the government to the point of turning a majority vote into a cause for scandal. What would in democracies be considered natural and logical –the one with the majority governs- in Mexico is a cause for embarrassment. The laws emanating from consensus dilute their content so much as to become irrelevant. My impression is that the “consensus” that the PRD would contribute toward the approval of legislation in energy matters would consecrate Lampedusa and his leopard: it will change everything so that all remains the same.

I don’t know to whom it occurred that political parties are democratic only when they elect their candidates and leaders democratically. International evidence for this is, in the best of cases, scant. But within Mexico’s context –a budding democracy and one far from being consolidated- partisan democracy has been a disaster. Each party that’s tried it has ended up worn out and a loser. When the PRI attempted it -2000 and 2006- it ended up in the opposition; when in that party a candidate (Peña-Nieto) constructed an overwhelming coalition without any primary elections, he ended up in the presidency: 2012. The opposite has come to pass in the PAN: the internal contest for the nomination in 2012 did nothing other than divide the party, provide ammunition for its opponents and lead it to defeat. In their book Democracy Within Parties, Reuven Hazan and Gideon Rahat argue that the way parties chose their candidates determines to a good degree their potential for success. Independently of the clamor from the gallery, it is evident that intraparty democracy is not a recipe for success in today’s Mexico.

The race for the PAN presidency was so pathetic that the sole aspect that was important was never discussed: what it was that made their two presidents mediocre and what they should do to recover the power. Instead of that, the contest revolved around the relationship between the PAN and the government. The Calderonists (supporting one of the contenders) have been unable to emerge from their self-absorption: I have not the least doubt but that this contest was resolved at the precise moment that Margarita Zavala (Calderon’s wife and potential candidate for the presidency in 2018) publically endorsed Cordero. Calderón, his family and candidate have not realized that no one in Mexico appreciates, at least at this time, his government as comprising a factor of concord or success. Publically embracing his candidate was the kiss of death.

Years of observing and acting according to the parameters of a democracy under construction have convinced me that we have very little raw material with which to work. The electoral law at the gates speaks for itself: none of those responsible –parties, legislators or government- is working around the development of strong institutions and of a functional government. If that’s not the objective of a politico-electoral reform (clearly Mexico’s foremost weaknesses in the political arena), then our beloved elected officials and representatives should devote themselves to something else. Mexican democracy does not have to be a perfect one, but what is indispensable is a government that works, making possible the growth of the economy and the security of the population. The electoral reform doesn’t deal with any of that.

A year and a half into its six year term, the great affair of the administration has been how to revert the tendency to anarchy toward which the country has gradually been leaning since the seventies. Some governments attempted to take the bull by the horns and instead were gored, as in the case of Calderón. Others, such as Fox, opted for avoiding the issue, leaving the country infinitely more complex and violent when his mandate was over. The present government proposed reconstituting the government as a formula for successfully confronting organized crime but the only thing it’s achieved so far is “democratizing” the latter, that is, extending violence and crime throughout the country, making possible its affecting a progressively larger population in the form of extortion and abduction.

Today Mexicans face three options: anarchy, authoritarianism or modern institutions. If nothing is done, we can rest assured that anarchy will continue to advance. I have no doubt but that there are many in the political ranks who believe that only an authoritarian reconstruction could restore order. That route might perhaps restore order, but would achieve neither growth nor stability and that’s where its error lies and, in part, the current stalemate in the Congress. Stability and growth can only be achieved with strong and independent institutions. Until this occurs, Mexicans will carry on with the myths.

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@lrubiof

Luis Rubio

There’s something Platonic in the current domestic debate: the constitutional reforms are like Plato’s shadows, the secondary ones are the reality. The first described the dreams; the second encountered the world of interests of the most diverse sort. The big question is why the process got stuck.

The easy part is identifying “the bad guys” and there’s no lack of proposals. The newspapers are full of explanations of what is or what has been the factor that got things stuck. For some the problem lies in the contradictions inside the opposition parties: whether it be their internal election processes or the real divisions that characterize them. Although much of this is true, they fail to explain why the government does not proceed to directly approve the proposals with their hanger-on parties.

Another line of interpretation blames the perennially favorite villains: the greedy companies that don’t want to relinquish their privileges or monopolies. Here it’s also clear that no entrenched power of any type (union, business, political) is going to cede their perks without a fight. However, there’s a contradiction between this explanation and the former one. It’s possible that both –intraparty discord and the might of private interests- have come together to produce the paralysis that characterizes the moment, but it’s obvious that contradictions are equally present in the governing party, the PRI. Thus, this line of argumentation also does not explain how it’s possible that the enormous drive that characterized legislative activity in 2013 has suddenly deflated. Something else must be holding up the process.

The core problem resides in the dislocations that the reforms promise. For starters, there’s no reform without dislocation: reforming entails change, affectation, correction. If a reform doesn’t alter the established order, it ends up being irrelevant. The objective must be that of constructing a new order and not merely dislocating the existing one: and the problem of the reforms –above all, but not exclusively, the secondary reforms-, is that they are designed merely to dislocate. Their rationale is political to a greater extent than economic or organizational.

The reforms of 2013 enjoyed support among the population. Part of this derived from the impact produced by the very fact that “at long last” the legislative machinery was in motion, but much had to do with the implicit promise of constructing a new environment. In order for a reform to have viability a support base is required that sustains the reformist government and makes it possible to neutralize the opposition of those who could be losers. Although ethereal and never expressly articulated, that support base contributed to achieving the success of the first stage of the reform, above all in the two reforms that really are truly susceptible of improving the life of the populace: the energy reform and that of communications. However, that support base was not the product of an intentional construction but rather of the generalized fedupedness of the society with the government and the politicians.

As in Andersen’s tale of the emperor’s new clothes, the secondary reforms have laid the governmental proposal bare: they made it evident that there was no transformative project but merely one of control. There are various indicators that reveal the nature of the project: they may be observed in the law of competition, in the differences in the way it would affect those now referred to as preponderant, the candor with which control of the Internet was attempted. Above all, what stripped the reformer project of its halo was the lack of a promising future. Nobody’s going to support a project in which the entire population loses. Assuming the opposite would be ludicrous.

In the final analysis, the shadows ended up dominating the promises, creating a scenario prone to maintaining the status quo. The constitutional reforms painted a panorama of possibilities, the secondary reforms promised a world of restrictions, everything under the control of the government.  No one should be surprised by the current situation.

The manifestation of all this is the new national political setting: a space in which dispute holds the upper hand over construction. Although the opposition parties could, perhaps at another moment in their history, articulate a grandiose proposal of transformation, construction depends on him whose responsibility it is to govern. The problem is that the government entertains a profound contradiction between its public face and its private objectives: the former promises a transformation, the latter have been exposed and are everything but transformative.

The great merit of President Peña’s government to date has been in his shrewdness and skill in taking advantage of the moment and of all of the instruments within his reach to achieve the first thrust toward the country’s transformation. His great lack has resided in the narrowness of the ulterior motive that inspires his project. Control is not, cannot be, a governmental objective. Control could be a means to achieving relevant objectives, but is not a substitute for an integral proposal of development. Likewise, reforms are means through which the attainment of a transformative objective can be advanced, but are not substitutes for the project itself. The project is lacking.

The good news is that the reforms approved in 2013 open up enormous opportunities for the development of the country; the bad news is that there’s no evidence of the existence of a vision capable of making these possible in the present reality.

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@lrubiof

                                                                                                             Luis Rubio

The notion of reforming acquired singular –in fact monumental- relevance in recent decades to a good degree because the first stage of structural modifications, at the end of the eighties and beginning of the nineties, was cut short. Ever since then, the mantra was that a set of reforms was lacking and that as soon as these were consummated, the country would enter into, at that precise moment of course, Nirvana. Now that the reformist dynamic has picked up speed, it’s a good time to reflect upon what it means to reform and the risks and opportunities that the country is facing.

The country has been stagnating for nearly a half century and, save for small instants of light, and circumstances that led to these, it has not found its way to development. The policy of “Stabilizing Development” died in the sixties because it didn’t have the gas to keep it going: the schema worked while the country exported sufficient grains and minerals to finance the importing of machinery and inputs for a closed and protected industry; when grain exports declined (the consequence of a failed agrarian policy), the whole model collapsed. The governments of the so-called “Tragic Dozen” (1970 to 1982) tried everything available to sustain that model and their sole legacy was a country in crisis, an enormous foreign debt and a society at odds with itself and with its government. It is not obvious to me why anyone would wish to return to that paradisiacal moment.

By the eighties Mexico was one decade behind: in that lapse fundamental economic and political changes were undergone in the world (economic ones in Asia, political ones in the South of Europe) from which Mexicans were distant, as if nothing could affect them. At the mid-eighties, the country finally started to take the bull by the horns: the era of the reforms begins and some sectors experienced the urgency to transform themselves and to breathe the breath of fresh air that this inevitably produces. The great merit of Salinas was that he changed the reigning vision: instead of looking back, he forced Mexicans to look forward: instead of looking inward, he obliged the country to focus on looking outward. It may seem minor, but his great legacy was strategic vision. There was none of that in the years before his term and it’s still absent today.

“Experience teaches that the most hazardous moment for a bad government is when it is just beginning to reform. Only a great genius can save a ruler who is setting out to relieve his subjects’ suffering after a long period of oppression”. Although this refers to pre-revolutionary France, it would appear that de Tocqueville paid a recent visit to Mexico. His argument is very clear: “As the prosperity in France developed as I have just described, men’s minds appeared meanwhile more anxious and unsettled. Public disquiet sharpened; the loathing of all ancient institutions was on the increase. The nation was obviously marching towards a revolution”.

Reforming implies altering the established order because it entails the affectation of interests and exacts adaptation to new realities. In this sense, each and every reform represents a challenge for enterprises, institutions, and government. Those who lose revolt and attempt to hold onto the past or to deploy landmines along the road to change; pitchmen seek the opportunity to lay hold of clienteles and head up a march, to wherever, usually the past. Political administration becomes crucial but generally does not fathom that demand and it is within that context that crises arise.

The 1994–1995 crisis was due to a financial strategy of fiscal deficit and debt but also to the shock that the reforms produced, including the loss of the PRI’s most basic asset: authoritarian and centralized control. The chaos of 1994 –assassinations, rebellions, devaluation- heralded a restructuring of the society’s power relationships that, through and through, has not been solved to date. Perhaps this might not be the magnitude of the gale-force winds that led to the French Revolution, but the results in Mexico have been pathetic.

Twenty years later we still have not finished abandoning the past and there’s no vision of the future. Last year’s reforms are important but what happens is going to depend to a much greater extent on the quality of the leadership and the vision with which the population is convinced of its importance than on its immediate contents. In a country whose institutions possess neither prestige nor capacity, the letter of the law is always relative.

At the same time, it is not possible to minimize the risks that the process itself generates. The complexity of the interests and potentials affected that lurk behind the holdups in matters of secondary laws cannot be underestimated. In his comparative analysis of the diverse reform processes, Samuel Huntington concluded that there is a severe risk of causing the fusion of the opposition parties in diverse reforms. “Instead of attempting to solve all these problems simultaneously… (they need to be) separated one from the other, win acquiescence or even support for one reform from those who would have opposed… other reforms… Economic growth, in short, required cultural modernization; cultural modernization requited effective authority; effective authority had to be rooted…”.

The reforms of the past era made headway within an authoritarian context that no longer exists, no matter how great the concentration of power. The great challenge is to construct forward or run the risk of encountering an explosive backdraft against it. Or, worse, another lost opportunity.

www.cidac.org

@lrubiof

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