Luis Rubio

Once when the Duke of Richelieu (1766‒1822), the French statesman, was planning a military campaign, an officer placed a finger on a map, saying: “We shall cross the river at this point.” Richelieu replied: “Excellent, sir, but your finger is not a bridge.” The difference between planning and achieving is enormous and is particularly notable when tensions are high, objectives are interlocked and the realities assert themselves.

The first year of the presidency of Enrique Peña Nieto has been everything that his fellow party members and detractors expected. As the former foresaw, the government has been efficient, organized, ordered and disciplined. There is a clear objective, it has reconstructed and fortified the structures of control, the governors have drawn back, the opposition parties are playing ball with the government (which has generated charges of “collaborationism”, not necessarily mistaken), the legislative agenda advances and the cabinet carries on without questioning anything. As his detractors anticipated, order is not the equivalent of having a plan, inexperience has translated into a very poor economic performance, insecurity is on the rise, the government’s popularity is ebbing and promises to maintain financial stability and eliminate obstacles to the development of the country vanish into thin air.

Beyond the contrasting positions and opposite perspectives that denote these dissimilarities, two things are unquestionable. The first is that today there is a government with a sense of power and order, something that had disappeared from the map since the seventies. Many criticize the excessive formality of the group in power, but forms are also content: they are an expression of order and a call to respect the rules, although these are unwritten, those of the PRIist system of yesteryear. The other, also irrefutable, is the profound contradiction between the government plan presented in the campaign that vowed to stand guard over economic stability, eliminate the obstacles to economic growth and launch a “transformative” project, with a lack of coherence among the diverse reforms advanced, the spirit of not affecting the interests close to the heart of the governmental party and an economic agenda oriented more toward satisfying particular political and bureaucratic criteria than the pledged transformation.

After nearly two decades of paralysis in the matter of relevant reforms (there was much legislation, the majority more political and social in character than truly structural in nature), the first year of this government has been especially significant for its obsession with advancing an ambitious agenda of modifying substantive themes liable to affect interests and to create new realities above all economic. For many years, there was talk, but no movement, about key reforms associated with labor, education, telecommunications, energy and taxes. In all of these, the government has made a reform proposal, nearly all involving constitutional amendments, it has negotiated with the opposition parties and has achieved their approval. From a formal point of view, the result is impeccable: the entire agenda took the form of legislation. The only one missing, the implementing legislation in the matter of energy, is only a question of time because the governing coalition has sufficient votes for approving this itself.

The problem lies in the quality, in the content of the reforms. In addition to that, their implementation will deal with basic conflicts that, one expects, will be infinitely more complex than those that have plagued the streets of Mexico City and some others in months past. Concerning the content of the reforms, the government made its own the notion that the problem was the absence of reforms and not the content of these. What was important was to place a check mark on the list of required reforms and the reality, as if by magic, would be transformed. If one observes the content of several of the already approved reforms, not much can be expected from them, and this assuming that they’re implemented in an integral manner.

The labor reform does not entail radical change; instead of liberalizing the labor market it makes it more bureaucratic. The educational reform constitutes an advance, but not as deep as its supporters suggest and we have yet to see whether it can be implemented. The so-called tax reform ended up being a big fiscal miscellany without greater coherence than that of financing, with deficit and additional public debt, an exacerbated budget, nearly all oriented toward defraying more bureaucratic expenditure, contrary to what was promised and running the consequent risk of sparking a crisis. The telecoms reform appears to have ended with a new arrangement among de facto powers on the subject. The energy reform is inconclusive and, although it is by far the most promising, it is impossible to know at this time whether the content of the secondary laws will favor a real change. In any case, what’s evident is that there is no connection among the diverse reforms: what was important was not to remove obstacles to growth and increase productivity but rather to be able to check them off on the list.

After approval of the secondary laws in energy matters the implementation of that and of the rest of the reforms will come. That’s where the administration’s profound objectives as well as its capacity of political operation will be put to the test. Some matters are relatively simple to translate and shift from legal reform into concrete reality: the “real” labor market will continue to exist in a world of contrasts where, in the reality, the law is ignored; in telecommunications its own law is already the product of arrangements among the actors in the sector. The conflict will persist in educative matters, where the key lies in separating academic from the strictly labor issues. The great conflict edging nearer is that of the world of energy where the internal interests of bureaucratic monsters Pemex and CFE will lock horns –their bureaucracies, unions, contractors- who for decades have plundered and pillaged without bounds. The government has been concerned with the protests in the streets, but these will be nothing compared with what will materialize when attempts are made to modify the reality of the sector.

The year has been impressive in two senses: on the one hand, in the façade of achievements and advances. On the other, in the inexperience of the government and its devotion to trying to impose its view, turning a blind eye to the reality. I have no doubt in my mind that in the ensuing months we will witness a clash between these two vectors. All that is left is to trust that there will be the flexibility to adapt the objective to the reality and not the other way around.

www.cidac.org

@lrubiof

FORBES -Luis Rubio

Politics is, after all, a matter of leadership, exhortation and conviction. In a presidential system, it is the head of the executive branch who stands in the bully pulpit to disseminate the history that he wishes to construct along his mandate and get the population on board behind his project. President Peña’s government has achieved full control of communications and the media and has consolidated itself as the heart of domestic politics, something that had not happened since the beginning of the nineties. However, beyond its qualities and project, the government is saddled with weight of the history of the past and, above all, in the way this has been told, which is scarcely conducive to the type of transformation that the president seeks.

All countries have their history and their dose of victories and losses, of opportunities and triumphs. But one difference among societies that get ahead and those that persist in their stalemate is the way they see themselves and how they project themselves to the world. The first great media success of the current government took place long before it won the election and consisted of dominating communications to the foreign press. Outside of Mexico, the future president was presented as a transformer of the country, as a person capable of giving a new thrust to the Mexican economy. That strategy remains in place: the main communications begin abroad and filter in. I ask myself whether this will not respond to the fact that the ideological hegemony (Gramsci Dixit) is contrary in good part to what the president has said abroad that he proposes to accomplish.

While nations such as France or the U.S. celebrate their independence and other festivities as great epic triumphs, Mexicans tend to emphasize the defeats, the abuse of the foreigners, the invasions. The very fact of having a “National Museum of Interventions” reflects the national spirit that we Mexicans have learned through the textbooks. That history, that way of telling it, places us in the role of victims, of losers and a society that conceives of itself in that manner can never achieve development. As Macario Schettino says, in order to be successful one first must imagine it.

The narrative is the way that history is told. Although it is evident that whosoever proposed to relate a narrative is inevitably trying to manipulate history, this is always told from the perspective of the one in whose hands lies the power to do so. The mere title of the classic The Great Lies of Our History, of Francisco Bulnes, shows that there’s nothing new in this theme.  The question is why not tell a history of winners: not lying and not manipulating, only telling and convincing the population of that other side of our history which, in a totally conscious and even abusive way, has been ignored.

Mexico is a country rich in successful entrepreneurs and in migrants who transform their lives, Oaxacan Indians who are bilingual for in Mixtec and English because they never learned Spanish but who commandeer successful supermarkets. There are architects of international stature and pilots who fly with airlines in Maylasia. The Cinco de Mayo celebration has acquired almost epic proportions precisely because the Mexican is avid of triumphs and memorable examples.  However, our history is generous in highlighting the victims and parsimonious in extolling the victories. The successful history that the government of President Peña wishes to construct must start within because it is the Mexicans,   from the most modest to the most pretentious, who will have to believe and thus project it to the rest of the world.

Porfirio Díaz said that “governing Mexicans is more difficult than herding turkeys on horseback”. He doubtlessly knew something about that. The government, and the country, must start somewhere and the enormous number of successful Mexicans suggests that the stance of the victim does not come from the population but rather from the sum of poor governments in our history and the insistence on driving victimization home.

Mexico’s change will occur, in this government or in another, in this century or the next, when the country defines itself in a more constructive manner, when it sees itself as the same as the rest of the world.  In other words, success requires a competent government, but is impossible if the society does not believe it is possible. The sum of good public policy and a coherent narrative with a vision of the future could begin to make the difference.

www.cidac.org

@lrubiof

Luis Rubio

In her extraordinary book on the way the Soviets controlled and imposed their law on the nations behind the “Iron Curtain”, Anne Applebaum* analyzes the differences in the evolution of each of these. For example, she shows how the countries that have been the most successful after the fall of the Berlin Wall are those that saw the development of an “alternative elite” in parallel to the existing government. There where there had been active discussions on the way to modernize the economy or to increase civil rights and collaboration among persons who, in time, established trusting relationships, the transition to capitalism was easy and nearly natural. In Poland the Solidarity Union, led by Lech Walesa, had been articulating and testing distinct forms of government for a decade; in Hungary there were groups of economists analyzing and comparing schemas of economic development. Contrariwise, in places where there were no similar situations, the old Communist politicians disguised themselves as democrats and appropriated the power once again. On reading this book I asked myself, which of the two is more like Mexico?

The return of the PRI has created an enormous wave of speculation. For some this constitutes the end of the schizophrenia, for others the revamping of the wheel of fortune. The requisite question for the citizenry must be distinct: What will the implications be of the change for the exercise of their rights, the development of the country, their family income and their security?

If, as Applebaum affirms, the success of some Eastern European countries was due to the existence of the alternative elites’ capacity for governing, the question is how is Mexico similar and how may it be differentiated from these. On the one hand, Mexico has for decades been developing an extraordinary technical capacity for being able to conduct governmental affairs. Legions of professional and well groomed economists have become the “platform” that permits the government as well as the parties in power to function. The civil society grows and comes to adopt ever more sophisticated forms. These examples could make one think that Mexico is similar to successful countries.

On the other hand, there are traits, such as the dysfunctional nature of the country’s politics of recent years, which suggest a resemblance to less successful nations. In contrast with Soviet totalitarianism, the Mexican political system allowed –in a “limited” manner- the development of opposition parties and, reluctantly or however, tolerated their victories little by little. Logic would have indicated that, in parallel with their growing presence in local and eventually in state governments, these parties would have developed the capacity to govern. However, with few and notable exceptions, this certainly did not occur in the PAN and only took place in limited fashion with the PRD. The fact that practically all winning candidates of the PAN-PRD coalitions have originally been PRIists speaks for itself.

There are numerous attempts to explain why this happened. Some assert that the PANist culture is incompatible with the functions of government: that they don’t have the malice required to exercise power. Others observe the behavior of the politicians and conclude that the problem is cultural and lies in the absence of democrats. Some, wiser still, recognize that the problem resides in the incentives that exist. For example, Fox had been so successful because of winning the election (and defeating the PRI after 70 years in power) that his potential for overcoming this feat was small, creating the perverse incentive of doing nothing more once in the presidency.

Applebaum** compares the performance of the diverse European countries from the fall of the wall with what took place with the “Arab Spring” nations and infers that alternative elites do not emerge from a vacuum and that, especially in the less successful European countries, they took years to consolidate. The author’s conclusion is that now that many begin to bury the incipient Levantine democracies, it is just when these may have begun to germinate. Could something similar be said about parties like the PAN and the PRD that face fundamental processes of internal redefinition?

These musings on the political moment that we live in make me think that the country is encountering a basic challenge that perhaps will terminate in defining its future in coming years One possibility is that the PRIist government will become established, will break through the impediments that have kept the country semi-paralyzed and will achieve its dream of maintaining the power per omnia secula seculorum, or whatever this would imply within a framework of democratic competition. Another resides in that the attempt to govern without assuming the costs concludes in a mediocre governmental and economic performance that leads it to lose the next presidential election or the following. Nothing is written in stone and anything can happen. That’s what creates a dynamic environment.

Most of the last decades, including the recent ones, were carried out without plan, without project and without political agreement betwixt and between. The result can be observed in the mediocrity of the same and in the level of conflict and political rancor accompanying it. What happens in the upcoming years will depend on the summation of citizen acts and those of their organizations, in the way that the political parties evolve, and of the degree of success of the government.

As the body responsible for governing and conducting public affairs, the government has the opportunity to construct the conditions that lead to the development of this alternative elite of which Applebaum speaks and, with this, to exert an influence on its transformation, instead of letting itself be carried along by the tide of inertia that the old PRI possesses in its entrails, devoting itself actively to constructing a novel political system, one compatible with the challenges and realities of a global world in the 21st century.

In his history of the fall of Rome, Edward Gibbon describes the way that laws end up being too numerous and the government so arbitrary that everything becomes immobilized. According to Gibbon, the Roman government ended up “uniting the evils of liberty and servitude” to the point that it destroyed its own empire.

Mexico has experienced two alternations of parties in power but has not achieved consolidating a modern system of government. It could continue to steep in commonplaceness, collapsing like Rome or tackling the road to development. Time will tell.

*    Iron Curtain: The Crushing of Eastern Europe

**  http://www.washingtonpost.com/opinions/anne-applebaum-preparing-for-freedom-before-it-comes/2013/02/07/80729050-70af-11e2-ac36-3d8d9dcaa2e2_print.html

www.cidac.org

@lrubiof

Luis Rubio

In her extraordinary book on the way the Soviets controlled and imposed their law on the nations behind the “Iron Curtain”, Anne Applebaum* analyzes the differences in the evolution of each of these. For example, she shows how the countries that have been the most successful after the fall of the Berlin Wall are those that saw the development of an “alternative elite” in parallel to the existing government. There where there had been active discussions on the way to modernize the economy or to increase civil rights and collaboration among persons who, in time, established trusting relationships, the transition to capitalism was easy and nearly natural. In Poland the Solidarity Union, led by Lech Walesa, had been articulating and testing distinct forms of government for a decade; in Hungary there were groups of economists analyzing and comparing schemas of economic development. Contrariwise, in places where there were no similar situations, the old Communist politicians disguised themselves as democrats and appropriated the power once again. On reading this book I asked myself, which of the two is more like Mexico?

The return of the PRI has created an enormous wave of speculation. For some this constitutes the end of the schizophrenia, for others the revamping of the wheel of fortune. The requisite question for the citizenry must be distinct: What will the implications be of the change for the exercise of their rights, the development of the country, their family income and their security?

If, as Applebaum affirms, the success of some Eastern European countries was due to the existence of the alternative elites’ capacity for governing, the question is how is Mexico similar and how may it be differentiated from these. On the one hand, Mexico has for decades been developing an extraordinary technical capacity for being able to conduct governmental affairs. Legions of professional and well groomed economists have become the “platform” that permits the government as well as the parties in power to function. The civil society grows and comes to adopt ever more sophisticated forms. These examples could make one think that Mexico is similar to successful countries.

On the other hand, there are traits, such as the dysfunctional nature of the country’s politics of recent years, which suggest a resemblance to less successful nations. In contrast with Soviet totalitarianism, the Mexican political system allowed –in a “limited” manner- the development of opposition parties and, reluctantly or however, tolerated their victories little by little. Logic would have indicated that, in parallel with their growing presence in local and eventually in state governments, these parties would have developed the capacity to govern. However, with few and notable exceptions, this certainly did not occur in the PAN and only took place in limited fashion with the PRD. The fact that practically all winning candidates of the PAN-PRD coalitions have originally been PRIists speaks for itself.

There are numerous attempts to explain why this happened. Some assert that the PANist culture is incompatible with the functions of government: that they don’t have the malice required to exercise power. Others observe the behavior of the politicians and conclude that the problem is cultural and lies in the absence of democrats. Some, wiser still, recognize that the problem resides in the incentives that exist. For example, Fox had been so successful because of winning the election (and defeating the PRI after 70 years in power) that his potential for overcoming this feat was small, creating the perverse incentive of doing nothing more once in the presidency.

Applebaum** compares the performance of the diverse European countries from the fall of the wall with what took place with the “Arab Spring” nations and infers that alternative elites do not emerge from a vacuum and that, especially in the less successful European countries, they took years to consolidate. The author’s conclusion is that now that many begin to bury the incipient Levantine democracies, it is just when these may have begun to germinate. Could something similar be said about parties like the PAN and the PRD that face fundamental processes of internal redefinition?

These musings on the political moment that we live in make me think that the country is encountering a basic challenge that perhaps will terminate in defining its future in coming years One possibility is that the PRIist government will become established, will break through the impediments that have kept the country semi-paralyzed and will achieve its dream of maintaining the power per omnia secula seculorum, or whatever this would imply within a framework of democratic competition. Another resides in that the attempt to govern without assuming the costs concludes in a mediocre governmental and economic performance that leads it to lose the next presidential election or the following. Nothing is written in stone and anything can happen. That’s what creates a dynamic environment.

Most of the last decades, including the recent ones, were carried out without plan, without project and without political agreement betwixt and between. The result can be observed in the mediocrity of the same and in the level of conflict and political rancor accompanying it. What happens in the upcoming years will depend on the summation of citizen acts and those of their organizations, in the way that the political parties evolve, and of the degree of success of the government.

As the body responsible for governing and conducting public affairs, the government has the opportunity to construct the conditions that lead to the development of this alternative elite of which Applebaum speaks and, with this, to exert an influence on its transformation, instead of letting itself be carried along by the tide of inertia that the old PRI possesses in its entrails, devoting itself actively to constructing a novel political system, one compatible with the challenges and realities of a global world in the 21st century.

In his history of the fall of Rome, Edward Gibbon describes the way that laws end up being too numerous and the government so arbitrary that everything becomes immobilized. According to Gibbon, the Roman government ended up “uniting the evils of liberty and servitude” to the point that it destroyed its own empire.

Mexico has experienced two alternations of parties in power but has not achieved consolidating a modern system of government. It could continue to steep in commonplaceness, collapsing like Rome or tackling the road to development. Time will tell.

*    Iron Curtain: The Crushing of Eastern Europe

**  http://www.washingtonpost.com/opinions/anne-applebaum-preparing-for-freedom-before-it-comes/2013/02/07/80729050-70af-11e2-ac36-3d8d9dcaa2e2_print.html

www.cidac.org

@lrubiof

Luis Rubio

In one of his famous stories, Sherlock Holmes solves the riddle because of the dog that didn’t bark. That was the abnormality that evidenced the criminal. I am no expert on energy matters, but over the past several months, I have devoted myself to reading and listening to experts who know what they’re talking about and from whom I have learned the rules and basic requisites that must be satisfied for an energy reform to have a reasonable chance to achieve the objective of attracting capital, developing the sector and constructing an additional platform –a powerful one- for the growth of Mexico’s economy. In a way, I have attempted to identify why the dog didn’t bark in the Mexican energy conundrum. What I’ve found won’t delight the country’s politicians.

I start with the analysis of an expert of the Inter-American Development Bank (IDB). His focus is Latin-American and absolutely analytical: to be exact, he doesn’t care about the nationalistic or political criteria involved; his sole interest is to evaluate the results of the strategies that take shape in the law that distinct nations of the continent have adopted to develop their energy resources. He inquires into, on the one hand, the rules of the game that each nation has established and, on the other, observes the work and the results produced by two decades of industry performance, country by country. This expert sums up his conclusion by grouping the Latin-American nations into two tiers: successful and failed. The measure of success or failure is very simple: the growth of the industry and its capacity to contribute to the development of each country’s economy. In the first group, that of the winners, he finds Peru and Colombia. In the group of the losers he finds Venezuela, Ecuador, Argentina, and Mexico. Brazil was one of the winners up to a couple of years ago when it began changing the rules of the game, thus insisting on being a loser.

The big question is: what is the critical difference? In a word, Ramón Espinasa, the IDB expert, says that the difference lies in the nature of the regulations and the strength of the regulator. Where the regulations are designed to promote the development of the industry, it prospers; where the regulations confound or undertake contradictory objectives the result is disastrous. Nothing better illustrates the situation than the case of Brazil: the first wave of reforms, in the nineties, pledged to create a true energy market in which the main actor, Petrobras, the Brazilian energy corporation, was conceived as primus inter pares, that is, as the privileged actor but not as the factotum of the industry. The first legislation granted neither privileges nor perks to the governmental oil company. That fact made it possible for diverse actors, foreign and domestic, to become interested in participating in the industry and to bid for contracts that the Brazilian government put on the market. However, in recent years the government modified the legislation, incorporating into it a series of criteria that clash with the former logic: now it demands that local content be part of the bidding process and that contracts be framed in partnership with Petrobras. That is, the new legislation procures governmental control of the industry. The result has been that none of the relevant actors worldwide –relevant above all because they have the technology and capital that the Brazilians (and Mexico) lack- has been interested in participating. That’s why Brazil has stopped belonging to the group of successful nations. The situation would be even worse for Mexico were it to require new investors to contract with the Pemex union.

If the objective is to attract investment and technology, the legislation must respond to the market characteristics, that is, it has to be competitive with respect to other nations that are also desirous of developing their hydrocarbons. However, Mexico’s focus has been exactly the opposite: the point of departure is that the rest of the world lusts after exploiting its potential oil and gas resources and the only thing the country has to do is roll out the welcome mat.  It is possible that this focus would have been viable ten years ago when the oil world was experiencing a pessimistic time and any opportunity seemed attractive, a moment known as “peak oil”. The situation changed drastically with the discovery of new fields and, above all, with the development of novel technologies that led to the shale oil and gas revolution.

The new world of energy, in which Mexico’s chief client will be self-sufficient, entails a competitive rationale –in fact, a buyers’ market, dissimilar to anything known in recent decades. In the words of one of the best known executives in the oil business, “Today there are numberless projects in the world and what’s in short supply is capital”. That is, the great actors on the planet will evaluate their investments contingent upon two factors: their potential profitability and the legal certainty that each nation offers. Profitability depends on technical (costs and risk) as well as regulatory factors. Certainty depends on the legal regime under which these must operate. Under present-day circumstances, no company of consequence would participate in a project that did not guarantee an attractive return and the certainty of no political interference in the development of its investment. More importantly, the calculation that they will make is not in reference to Mexico but rather to the entire ensemble of options and opportunities in its prospective portfolio. To be precise, when Mexico publishes a new regime on energy matters it will be competing with Vietnam, Cuba, Russia, Indonesia and the US itself: in other words, with the rest of the world. In all of this, the referendum that the left is demanding would entail an additional –enormous- cost and risk, further delaying any potential investment.

All this implies only one thing: Mexico had better create a truly competitive regime that would attract important and relevant players worldwide or stop wasting time. It is obvious that the big players will demand any number of conditions before a new regime is legislated although, at the end of the day, they could probably live with something less ambitious; but there’s no way of knowing until it happens. The evaluation performed by the investors that the government wants to attract will be ex post facto. It is then that the true verdict on the reform will be rendered. Were the legislation to be insufficient, the result would be a disaster.

From my learning I am able to say that, beyond the strictly technical, the crucial difference lies in three factors: a) the (real) independence of the regulator as the ultimate authority; b) the inexistence of absurd requisites such as partnership with Pemex or local content; and c) the development of an energy market that allows the players in the industry to operate by market ̵ as opposed to political- criteria. What’s riding on this is, in a word, EVERYTHING.

www.cidac.org

@lrubiof

Luis Rubio

How is the success of a society measured? Is being successful the same as being modern? The difference perhaps was insignificant some decades ago, but today it is possible to differentiate successful from modern countries. Maybe the question for Mexicans now that the government is ending its first year is whether the country is in line to be as successful as it is modern or whether it will proceed in an attempt to be successful and nothing more.

Protagoras, a fifth century B.C. thinker, argued that men by definition require standards of behavior because without this they would be unable to live in community. In the absence of the Bible or its equivalent, tradition played a predominant role in the determination of these standards, the reason why attacks on tradition from radical thinkers like Socrates or Diogenes generated such mistrust. Contrariwise, Aesop’s Fables would serve to reinforce the sense of community. Which would be the relevant standard for a nation at the beginning of the XXI Century?

China is perhaps the best paradigm of a country that has achieved being successful in countless measures but that confronts fundamental dilemmas that it may not be able to resolve without changing its own measure of success. At a conference that I attended recently, a scholar from India stated that his country is not modern because it is very poor, but that if it overcomes its poverty it could be a modern country, while China could be successful but never modern. The distinction that he made was profound: for a nation to be modern it must accept certain basic standards of behavior and certain metrics of development. The fact of growing fast, as has been the case of China in recent years, can contribute to generating conditions for modernity but it is not the equivalent of achieving it.

Success can be measured with comparable statistics: growth, employment, educative levels, productivity, miles of highway, international reserves, and other objective measurements that permit evaluation of the degree of advancement in absolute as well as in relative terms. That is the simplest measurement employed for determining the performance of a government or the satisfaction of its population. A successful nation advances on these fronts and satisfies the most basic needs. If it is extraordinarily successful it attains raising the population’s living standards, improving the distribution of income and maintaining a virtuous circle within these parameters.

What is not evident is whether systematic improvement in all of these measurements would be sustainable without changing other things in the functioning of the society in general. Going back to China, the most frequent debates about the future of this country refer to the viability of its political structure in view of the systematic improvement of the economic levels of a growing portion of the population. Some affirm that the Chinese culture possesses exceptional traits and that these will allow sustaining its political system without changes despite the development of its society. Others espouse the principle that, in the basics, all societies are similar and that, sooner or later, the Chinese will confront fundamental dilemmas concerning the viability of their current politico-economic structure.

Time will tell how China evolves, but what is indisputable when one thinks of the development of Mexico over the past decades, is that there are structural limits that impede transcending the thresholds of the possible under the present structure. For example, it is not coincidental that private investment, domestic and foreign, is found well below its potential. It is also not coincidental that most investments are made with much shorter times of maturation than take place in other latitudes. The same can be said for the investment cycle: it typically follows the six-year calendar because everything depends on the trust that a person -a president or governor- inspires more than the strength of the institutions.

The key to the future is found in the latter. The part of the economy that observes significant investment growth is that which is protected by international treaties, above all NAFTA, which is nothing other than an institution that confers guarantees, thus certainty on the investor.  Where there are institutions that do not depend on persons the country prospers.

The point I am attempting to illustrate here is that success depends on the country becoming modernized and this implies the construction of strong institutions that transform the country and the society. It is not possible to conceive of Mexico as a successful country while we continue not having, for example, a police system that the population respects and perceives as professional. The same is true of the judiciary: without mechanisms to settle disputes and administer justice, no country can claim to be modern.

In other words, modernity is a cultural matter that is the consequence of the integral development of the society. The case of the growth of the middle class is suggestive: the country has achieved consolidating a middle class in terms of its capacity to consume, but it will be middle class and successful not when that population has a little more money to spend but only when it also has the educative and cultural level that permits it to exercise informed judgment in social and political affairs.

A country engrossed in itself, like China is at present, cannot advance toward the adoption of rules and standards that all modern and democratic societies consider essential in ambits ranging from international trade to citizen rights and respect for others. Whether for good or for bad, the Chinese government does not see relevance in these measures for their society.

The government is beginning to confront these dilemmas, implicitly or explicitly, in every decision that it is making, and the way it responds to them in the coming future will be key. The road that has led us to where we are has been tortuous and complex and the natural temptation is to return to what was and that, in a nostalgic look over one’s shoulder, could appear to have worked well. The problem is that what was possible in the past is no longer possible today. Of course numberless errors have been committed throughout the past decades, but the only wager possible is that of building a modern country.

Perhaps what best illustrates our problems is the fact that our great weaknesses are found in the appalling quality of our governmental structures and institutions. The country continues to have a medieval system of government, incapable of heading a project of transformation.  The challenge lies at home, essentially in what the PRI constructed in the past.

www.cidac.org

@lrubiof

Luis Rubio

There’s nothing more dangerous than a fetish, a superstitious cult venerated as an idol. Like all myths, the reelection of legislators contains a hearty dose of fable, imagination and reality. In an ideal context, reelection can transform political relations, creating new forms of interaction, thus novel logics in making decisions. Well-conceived and structured, the reelection of legislators could constitute the factotum of an effective system of checks and balances for the Mexican political system. The problem is that the opposite is also true: ill conceived, reelection can become a nightmare, a new source of confrontation or even worse, everything would stay the same.

In his book, Orthodoxy, G.K. Chesterton wrote that “When a religious scheme is shattered it is not merely the vices that are let loose. The vices are, indeed, let loose and they wander and do damage. But the virtues are let loose also; and the virtues wander more wildly, and the virtues do more terrible damage”. Reelection of legislators is an instrument, not an end in itself and, as such, can be a virtue or a vice: it depends on how it’s structured. The crux lies in understanding that either of the two scenarios is possible but that not both are benign.

In a perfect world, the reelection of legislators would aid to situating them closer to the voters, obliging them to see to their preferences in a direct manner and with a cost involved in not doing so. The idea behind reelection is that members of the congress or senators who want to remain in their posts permanently (or as long as term limits proposed in the bill allow), will do whatever possible to tend to the needs or claims of their constituents with the aim of gaining their loyalty and, of course, their vote. That is, it establishes a link that doesn’t begin and end, like it does now, during the campaign period, but one that becomes permanent.

In all political systems, as in life, individuals act according to what is in their best interest. In this lies the essence of reelection: it is about a mechanism designed to align the interests of legislators with those of the citizenry, under the supposition that the former will court the latter in their daily comings and goings as if they depend on them to keep their job. Under this logic, in a political system where reelection does not exist, legislators naturally act under a criterion strongly determined by their party’s interest, because on this depends the legislator’s career just as, in former times, in the PRIist era, this depended on the President. Contrariwise, in an electoral system in which reelection does exist, legislators train their artillery on what concerns the citizenry: there’s nothing esoteric in this matter. But who wins and loses is obvious in every case.

The reticence is evident of the parties and of the Presidency in terms of adopting reelection as a mechanism for the construction of checks and balances in the political system. With the rationale of the proprietor, the party leaders as well as the President could wind up losing a fundamental prerogative (a major source of political control) on approving the reelection of legislators. Reelection could open up, at least potentially, a new political era. But the result that its proponents expect is not guaranteed.

There are two main arguments on the part of the detractors   of reelection: first, that it impedes renovation of the political elite, in good measure because it confers enormous advantages on whomever already occupies a seat, diminishing the competitiveness of their potential opponents. And, second, that, given the peculiar hybrid that characterizes our legislative power where legislators elected by district coexist with other legislators elected (in a distinct manner in the Congress and in the Senate) by proportional representation, we could end up, for example, with senators who are the product of a first minority (that is, they lost the election) for up to twelve years, having never won a race. Both concerns have their own merits but their dynamic is nearly opposite.

Among the potential benefits of reelection, the two crucial ones are accessibility of the voter to his/her representative and the professionalization of the legislative function. From my point of view, both surpass the cost of lesser mobility in the legislature, particularly in given the ever growing complexity that body has to deal with.

The real imbroglio resides in the coexistence of the two types of legislators (direct and proportional representation) and that is no minor affair. Simply stated, reelection is incompatible with the existence of that hybrid: for it to function, one of the two election procedures would have to disappear. It would be equally bad –and defeat the purpose- if the political parties reserve themselves the right to vet who can run for reelection. Each person will have their preferences, but on not resolving these matters, reelection would turn out to be a disaster.

There are various angles that should be considered before forging ahead, hit-or-miss, toward a worse result than that already in existence: first, reelection works only when there is one legislator per district; the legislator can be elected directly or proportionally, but if that legislator-district link is not there, the reelection will have no benefit whatsoever. Second, historically, many of our best legislators have been elected by proportional representation and, probably, many of them would not be able to win a direct election. That is to say, in some scenarios, we could end up with a legislative branch that is much worse in quality independently of the potential legislator-citizen proximity. Although it seems impossible, a scenario is conceivable in which legislators enjoy even lower prestige. Finally, on eliminating proportional representation (or its equivalent in the Senate), some parties would diminish in representation. That wouldn’t necessarily be bad (doubtlessly reducing some of the rampant corruption), but it would imply difficult decisions, those that politicians always shy away from. Redistricting the country, perhaps increasing the number of seats of direct representation instead of those by proportional representation could mitigate the cost.

In contrast with the complexity inherent in the legislative system, reelection of municipal presidents would require no more than a political decision: the potential benefits are clear and the risks relatively minor. This said, reelection cannot be seen as an idea: it pertains to a political instrument whose objective it is to fortify the checks and balances in a society, a crucial step for the institutionalization of power. For reelection to have the desired effect, it has be conceived within the context of its risks and complexities, not as a sure bet, one of those so frequent in Mexico and that nearly always end up unsuccessful, if not perilous. Miracles do not exist.

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Luis Rubio

Some days ago, surfing TV channels in a hotel room, I found myself watching a discussion program on TVE, the official Spanish television network. The matter being debated dealt with a crime that had occurred in Malaga. What was interesting about the debate was the implicit frame of reference that characterized the discussion. The matter in question was the rape of a mentally disabled woman by a group of men who had abducted the woman and taken her to an apartment. Hours later, the police were finally able to locate the woman and take her to a hospital. In the discussion two things caught my attention because of their transcendence for Mexico. First, the taking for granted that the police would be diligent and competent in locating the woman. Second, in the words of one of the program participants, citing from memory, “But what were these men thinking: they are going to be arrested and all would end up in jail”. None of these premises would be possible in Mexico.

Beyond its crisis, transitory or structural, the great difference between a developed country such as Spain and another like Mexico lies in the quality of government. A government has basic responsibilities that constitute the essence of the society’s capacity to function effectively and successfully. While there are many definitions of what these responsibilities are and different positions on which those functions should be, no one would dispute the essential: public security, the rules of the game for economic activity, justice and the physical as well as the institutional infrastructure required for a country to work. Some would limit governmental functions to the basic (“the best government is the one that governs least”), while others would prefer an integral “welfare state”, but all would accept that an effective government is a crucial factor for the functioning of a country. In Mexico we are quite given to entering into ideological discussions on these matters while not even having the basics, those which persons participating in the Spanish panel discussion took for granted.

We Mexicans speak of economic growth, competitiveness, human rights, justice and other desirable objectives but we do not recognize that we lack the essential –a system of government- capable of contributing to the achievement of these. Grandiose legal reforms that establish new citizen rights and, in many of these reforms, new obligations for the government are approved, but the government’s total incapacity –physical, institutional and financial- to achieve these is not recognized. We speak of corruption in a moralistic tone that would make it appear that we never see such an act and, of course, would never be involved in one. The essentials –the structure, functions and capacity for action of the government- do not exist or, when they do, are very inferior to those that are necessary. Worse if we look at other levels of government: states and municipalities.

Mexico confronts two fundamental challenges with regard to the governmental function. One is concerned with the quality of the government and the other with its capacity to process conflicts and to create conditions for permanent prosperity. The former has to do with administration and its objectives; the latter with the strength of its institutions and their checks and balances.

Historically, the Mexican Government was relatively successful when it exercised centralized control and imposed its authority on the population as well as on other factors that wield political and administrative power. The eras of Porfirio Díaz and the PRI in its good years bear factual testimony to this assertion, but that was possible in the era before globalization and the network of world relationships that are the mainstay of the population of today. In the absence of reliable institutions and of a federal structure with individuals compelled to be accountable, the country suffered through diverse ills: revolutions, uprisings, instability and/or poor economic performance. The instinct of the Peña administration toward centralization of power is not by chance: it concerns a logical response to the challenge. The relevant question is whether centralization will be an instrument or an objective: if it is an instrument, it could be employed to construct a new institutional regime that allows for an era of stability and prosperity; if it is an objective, the only thing it will achieve will be the imposition of a temporary order that, as we have seen so many times in the past, tends to be short in duration, if it ends well at all.

With respect to the administrative responsibilities that correspond to the government, some things work and others don’t. For better or worse, for example, practically the totality of the country’s urban zones have potable water, drainage and electricity. The same can be said for education or the presence of police officers and courts –and multiple other services- throughout the territory. One conclusion to which this could lead is that the government “does what it can” and that if one observed diverse indices of service coverage, these have improved over time. Another way of seeing it is that services tend to be poor in quality, waste is enormous and, overall, conditions are not being created for the construction of a modern country, with better opportunities for the entire population. Both views are true and complementary: what we have is a system of government wrapped up in itself, devoted to satisfying the objectives and the interests of its members ahead of the needs of the population.

The case of the police and the administration of justice are particularly noteworthy: with very few exceptions, this is where one of the greatest lacks –and flaws- of governmental function is evidenced. The country requires a radical transformation of the focus of the function of the government: it must be conceived as a guarantor of the freedoms and rights of the population and as promoter of development, thus it must devote itself to creating conditions that make this possible. The new government vowed efficacy, something necessary but not sufficient: it’s not enough for it to “make things happen”; it also needs to see development advance. Now, with the country is stuck, it is ripe time to refocus the strategy.

Institutions are the means and the form through which a society processes conflicts and creates conditions for prosperity. Different from the governmental function, institutions, to be one, have to be permanent, that is to say, not dependent on the will of one person as occurred in the PRI era. An institution is strong when it creates rules of the game with which everyone complies. That’s the key: depersonalization and permanence.

The members of the televised Spanish panel took for granted that a government of institutions exists. That’s what we’re missing:  a government that works and that doesn’t depend on who’s in power.

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Forbes – Luis Rubio

Marie Curie, the Nobel Prize winning scientist, on a certain occasion affirmed that “one never notices what has been done; one can only see what remains to be done”. That is, in a certain way, the curse of politicians: no matter what they do, and less so in this era of exacerbated expectations, what the population demands is what is lacking or what others already have. It’s about a circle that very easily turns vicious; thus, it’s much easier (in fact, inevitable) to act when there is a crisis while what’s typical, when things are going well, is to avoid running risks.

Crises oblige us to act simply because the deterioration is immediate, above all when these are currency exchange crises akin to those we underwent for some decades. Prices shot up within a matter of hours, interest rates soared, businesses fired personnel and consumers rushed to buy whatever possible before prices went up. For a government in this situation there are no two ways about it: act or act. The latter is not to say that its responses are always the most fitting; in the last half century (or more), Argentina has been the perfect example of a country that refuses to act, but its case is somewhat exceptional because it concerns a country whose population does not grow and the country has a food surplus. This combination has sanctioned all sorts of outrages and irresponsibilities.

Mexican governments have not had a similar option. When the crises arose, the government had to act. In a certain way, we Mexicans have been very privileged because of the fact that the governments that faced the financial crises of the 70s to the 90s did so directly and unceremoniously. Clearly, they had no alternative, but the fact is that on each occasion it was the technicians who took hold of the reins of the process, although afterward they had to relinquish them. And the problem lies in the latter: the country resolved its crises and, for nearly twenty years, has steered clear of another, but that does not mean to say that it has been able to erect an auspicious platform for the sustained growth of the economy, and even less so for the construction of a developed, civilized, and modern country.

The problem of Mexico problem is that it has stayed mid-river. It has carried out innumerable political reforms but we are far from achieving the consolidation of a political system in which the key actors –for example the parties- were satisfied and were to confer legitimacy upon the government without disputes and to an even lesser degree one in which the politicians were to respond to the citizen. In the economy there co-exist two contradictory worlds: one as successful and competitive as the orb’s finest, the other that can hardly be differentiated from the most backward third world nations. The judicial power is mired in a reform that is rejected by the greater part of those who are its main actors and apparently no one is willing to bring it to fruition. The country’s police, with few exceptions, are inadequate, to say the least, for the type of challenge that the country is facing in the field of criminality. In the social ambit, the country exhibits an inequality that makes it impossible to pretend that we are approaching the developed world.

My point in all this is not to say that everything is bad or that there hasn’t been progress, but that it is indispensible to recognize not only the size of the challenge, but above all its nature. Today’s nation scarcely resembles that of some decades ago: although we are far from having achieved development, today’s Mexico is not the poor country of yesteryear. Of course reforms are required that make accelerating the growth of the economy possible, but what’s most required is a vision of development that makes it feasible to marry the measures adopted today with the objectives to which we Mexicans aspire to achieve tomorrow. That is, the true challenge is not a reform here and there but of a clarity of vision –and of the leadership that is predisposed to usher in the process of making it a reality.

“One never notices what has been done; one can only see what remains to be done”

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Luis Rubio

In the Christmas movie “It’s a Wonderful Life”, Clarence, a guardian angel, shows leading character George Bailey what would have happened had he not lived. For this Clarence invents the town of Pottersville, bad guy Potter’s city, to illustrate how terrible and inhospitable the place would have been had Bailey not been born. Bailey reconsiders his decision to jump off the bridge and returns triumphant in the Hollywood-style epic. The problem, says Gary Kamiya*, is that many prefer the exciting and perverted life of Pottersville to the boredom and tranquility that Bedford Falls represents. In Bedford Falls everything is an ideal world from the perspective of what’s “correct”; Pottersville is a world of the desirable, of amusement. This metaphor serves to illustrate that the politically correct is not always the best public policy.

Over the past years, the country adopted a series of measures in energy and environmental matters that would be logical and acceptable –politically correct- in an ideal world, but that clash with the best interests and characteristics of the country at present. Specifically, at the beginning of last year legislation was passed on environmental matters (the General Law of Climate Change), adopting a regime nearly as strict as that distinguishing the European Union. The legislation establishes highly restrictive goals, such as those for 2024, when 35% of the energy that the country produces should derive from renewable sources and that by the same date carbon emission should be 50% less than those of 2000. Approval of the law brought with it two reactions: on the one hand, the applause of all of the politically correct who legitimately embrace a less contaminated world, but generally without contemplating the implications of the regime adopted. On the other hand, as usual in Mexico, the law establishes grandiose goals but no specific instruments or sanctions. That is, some due to apathy and others due to responsibility, our legislators opted for applause without generating intolerable costs. An additional step in this direction has been taken with the government’s proposal to launch a carbon tax.

From my perspective, the central criterion that we Mexicans should adopt for the future is that of economic growth. This objective is the only one that brings together the parties, the political forces, the unions, the business community and the citizens: we all want a driving and buoyant economy that permits raising the quality of life, generating more and better jobs and creating more amenable conditions for resolving the country’s problems –the new ones and those we inherited. In this world era, the sole way to achieve growth is raising productivity and being more and more competitive. The question is whether this clashes with the environmental plan being advanced.

In pragmatic terms, it is imperative to recognize two factors: on the one hand, paradoxically, no international treaty or legal regime, such as those proposed at Kyoto, demands that a country like Mexico, in its designation of developing country, would have to assume such a commitment. For better or worse, none of the treaties incorporates developing countries into the regime of commitments. I understand that approval of the law offered an opportunity to shine for the country before the Conference on Climate Change in Cancun. However, it also demonstrated the need to please above recognition of the   country’s realities and necessities.

The other factor that needs to be recognized is that it is absolute madness to assume a regime based on the elimination of carbon-based energy sources in a developing country with ample oil and gas resources. What’s necessary is a competitive regime -a true energy market- that would allow for the development of different types of energy and technologies to produce them, including, of course renewable. It is ludicrous to penalize the use of traditional sources of energy, perhaps the greatest source of comparative advantage that the country possesses, especially in these times that the price of natural gas could become an enormous competitive edge, source of growth, employment and inexpressible wealth. The proposed energy reform aims at liberalizing the domestic energy market and, to the extent that this project leads to a competitive framework, could lead to the flourishing of both traditional and renewable sources of energy. What makes no sense is to commit huge investments to alternative energy when an efficient market would do it at a much lower cost and in a manner that could foster economic growth. It is not by chance that nations such as China, Brazil and India have stayed on the sidelines: better for them to be criticized for not making a commitment than for not complying with them.

According to the Italian Bruno Leoni Institute**, the cost of creating one “green” job is equivalent to creating 6.9 industrial jobs. This rationale was what lead noted German environmentalist Fritz Vahrenholt to affirm that, in an era of austerity and restrictions on all fronts, “we’re destroying the foundations of our prosperity. In the end what we are doing is putting the German automotive sector at risk, the steel, copper and chemical sectors, silicon, you name it.” If one of the heroes of the Green Movement thinks this way, why should we be holier than thou?

The issue of the future is productivity because that is the principal source of competitiveness, a factor that attracts investment and allows for the generation of jobs that add more value, thus that pay better salaries and reduce energy consumption. There is no way of achieving this if we don’t adopt, as a country, a strategy devoted to raising productivity. As everyone knows, productivity implies doing more with less and for this conditions are required that make this possible. In the case of energy, the key lies in creating a competitive market, not massive government investments or paralyzing taxes.

Bjorn Lomborg, the environmentalist who abandoned the movement when he noticed that the cost of assuming the struggle against global warming was enormous in the face of how limited the potential was of achieving the desired objective, says that the greater part of the money invested in combating climate change –above all direct and indirect subsidies to the generation of renewable energy- constitutes a waste because even the most restrictive regimes in these matters have no chance of modifying the trends already in place. Faced with this, we would do well to devote ourselves to eliminating impediments to the growth of productivity, because it is from the latter that the income and the jobs that the country so greatly needs will materialize.

*http://www.salon.com/2001/12/22/pottersville/

**http://online.wsj.com/article/SB10001424052702304203604577398541135969380.html?mod=googlenews_wsj

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