Luis Rubio

“Each tells the tale as it went for him at the fair” says a popular old refrain. The same is true for corruption, access to justice and the quality of government. It is not in vain, as GK Chesterton once wrote, that “the poor have sometimes objected to being governed badly, the rich have always objected to being governed at all”. The perspective is important: each citizen finds himself in a distinct place on the social, political and economic value chain in society and this place confers upon him a greater or lesser capacity to influence his own destiny or that of the society. Inevitably, these differences translate into distinct social behaviors. Corruption emanates precisely from these differences and manifests itself in the strangest ways.

Corruption, together with impunity, is one of the ills that the major part of the population identifies as at the heart of our problems. In conversations, tweets or serious discussions, it is impossible to elucidate the generalized perception of the endemic ills to which the population objects and that are, however, immovable, a permanent part of the scenario. At the same time, these same individuals who object not infrequently resort to this self-same corruption to resolve a problem or to confront an everyday situation. Is this a contradiction?

A similar situation can be observed in the way that the application of the law is deliberated. For some the central problem lies in the unwillingness, or inability, of the authority to make the existing regulations stick and, even, in their propensity to modify the laws in order not to have to enforce them. For others, the laws are designed to benefit the powerful and to preserve their interests. Can one and the same law possess these two characteristics, be inherently contradictory?

For its part, the authority, of any type and level, confronts daily realities that become inexorable and defining. Undoubtedly, some governments prefer to privilege antagonistic and even violent groups because of their own political or ideological motivations, but the majority knows that enforcement of the law is often impossible in the terms under which the regulations establish it. The case is not infrequent of a municipal president or a state governor who employs public force as established by the law, only to find himself with a political conflict of enormous scope due to his acting: the original matter shifts to second place and the problem the society identifies as the “real” one ends up being the “repression” or the violence with which the governor acted. John le Carré said it very well in one of his novels: “All power corrupts but some must govern”. How, then, to govern under conditions like these?

There is no doubt that the country is experiencing moments of political and social effervescence that project a society in conflict with itself but also, returning to the original theme, rights and realities are disproportionately biased in favor of those at the pinnacle of the power value chain. The corruption -impunity- that characterizes  the way authorities, some companies and criminals incur are nothing other than the reflection of the excessive differences of power and access to same in this chain.

Corruption is many simultaneous things. In some instances it is the consequence, in others the symptom and, for many, a means to the solution of their problems. It depends on the position on the “value chain” of power where one finds himself. For the run-of-the-mill citizen, corruption is the solution to the authority’s excessive discretional power: a bribe –small or large- allows the citizen to wriggle free from an inspector, a traffic officer or a bureaucrat whose powers are so vast that this ends up being a functional solution. Corruption is symptomatic of a festering political system characterized by the existence of so many laws and rules that confer such broad powers on the authority that the potential for abuse is immense and permanent.

In a word, corruption derives from the existence of such generalized, imprecise and undefined laws and regulations that they open vast spaces of discretional attributions, conferring excessive power –arbitrary- on the authority, at all levels. This excess of authority translates into diverse social evils: inequity in the application of the law, the possibility of rewarding some and punishing others employing the same statute, whether they be union or company bosses or individuals. It translates into impunity -another form of corruption- for those wielding power.

This context is what makes it possible for the “de facto powers” to be nourished and to grow, for delinquents and criminals to appropriate the streets, highways or border crossings and for there to exist an environment of permanent uncertainty regarding people’s security and that of their rights and property. In the country, the most commonplace of inspectors or their peers in other ambits possess such enormous authority that they can decide on the opening or closing of a company or whether a person ends up in jail. In similar fashion, the powers of the regulatory entities are so vast that they can decide on things at will. So much arbitrary power makes it impossible to have a reliable and credible authority. Instead of having clear guidelines, the authority possesses great latitude, opening spaces of enormous impunity, thus arbitrary and illegitimate, and also dysfunctional. These excesses in turn translate into environments that facilitate the entrenchment of monopolistic practices, the taking of buildings or roads and violence. Or passing ludicrous laws. Recognition is key to observing that these elements comprise distinct sides of the same coin.

Under these circumstances, it would be absurd to pretend that more of the same type of regulations, laws or entities could end corruption: laws have consequences. What Mexico requires is to delimit the boundaries of the powers that the laws grant, open spaces of competition in all ambits, eliminate restrictions on trade and imports and, in a word, create conditions so that no one –government, enterprises, unions, political parties- would entertain the possibility of accumulating so much power or the capacity for imposition as happens now. When the playing field of this “power value chain” is more level, less biased and more equitable, the country could flourish.

Corruption and impunity, twin sisters, are the product of our political reality that takes root in laws and regulations. The reality will change when the game preserves from which these emanate are attacked, when bureaucratic faculties are well defined and delimited, eliminating arbitrariness, the mother of all corruption and impunity.

The electoral bill just passed by the Senate is a jewel of incentives for corruption and impunity. It would be desirable that it be dismissed outright by the Congress. If this does not happen, the citizenship better hope that the energy reform (that was exchanged for the electoral bill) at least justifies such an arbitrary law and the anti-democratic features it comes associated with.

www.cidac.org

@lrubiof

Luis Rubio

“Each tells the tale as it went for him at the fair” says a popular old refrain. The same is true for corruption, access to justice and the quality of government. It is not in vain, as GK Chesterton once wrote, that “the poor have sometimes objected to being governed badly, the rich have always objected to being governed at all”. The perspective is important: each citizen finds himself in a distinct place on the social, political and economic value chain in society and this place confers upon him a greater or lesser capacity to influence his own destiny or that of the society. Inevitably, these differences translate into distinct social behaviors. Corruption emanates precisely from these differences and manifests itself in the strangest ways.

Corruption, together with impunity, is one of the ills that the major part of the population identifies as at the heart of our problems. In conversations, tweets or serious discussions, it is impossible to elucidate the generalized perception of the endemic ills to which the population objects and that are, however, immovable, a permanent part of the scenario. At the same time, these same individuals who object not infrequently resort to this self-same corruption to resolve a problem or to confront an everyday situation. Is this a contradiction?

A similar situation can be observed in the way that the application of the law is deliberated. For some the central problem lies in the unwillingness, or inability, of the authority to make the existing regulations stick and, even, in their propensity to modify the laws in order not to have to enforce them. For others, the laws are designed to benefit the powerful and to preserve their interests. Can one and the same law possess these two characteristics, be inherently contradictory?

For its part, the authority, of any type and level, confronts daily realities that become inexorable and defining. Undoubtedly, some governments prefer to privilege antagonistic and even violent groups because of their own political or ideological motivations, but the majority knows that enforcement of the law is often impossible in the terms under which the regulations establish it. The case is not infrequent of a municipal president or a state governor who employs public force as established by the law, only to find himself with a political conflict of enormous scope due to his acting: the original matter shifts to second place and the problem the society identifies as the “real” one ends up being the “repression” or the violence with which the governor acted. John le Carré said it very well in one of his novels: “All power corrupts but some must govern”. How, then, to govern under conditions like these?

There is no doubt that the country is experiencing moments of political and social effervescence that project a society in conflict with itself but also, returning to the original theme, rights and realities are disproportionately biased in favor of those at the pinnacle of the power value chain. The corruption -impunity- that characterizes  the way authorities, some companies and criminals incur are nothing other than the reflection of the excessive differences of power and access to same in this chain.

Corruption is many simultaneous things. In some instances it is the consequence, in others the symptom and, for many, a means to the solution of their problems. It depends on the position on the “value chain” of power where one finds himself. For the run-of-the-mill citizen, corruption is the solution to the authority’s excessive discretional power: a bribe –small or large- allows the citizen to wriggle free from an inspector, a traffic officer or a bureaucrat whose powers are so vast that this ends up being a functional solution. Corruption is symptomatic of a festering political system characterized by the existence of so many laws and rules that confer such broad powers on the authority that the potential for abuse is immense and permanent.

In a word, corruption derives from the existence of such generalized, imprecise and undefined laws and regulations that they open vast spaces of discretional attributions, conferring excessive power –arbitrary- on the authority, at all levels. This excess of authority translates into diverse social evils: inequity in the application of the law, the possibility of rewarding some and punishing others employing the same statute, whether they be union or company bosses or individuals. It translates into impunity -another form of corruption- for those wielding power.

This context is what makes it possible for the “de facto powers” to be nourished and to grow, for delinquents and criminals to appropriate the streets, highways or border crossings and for there to exist an environment of permanent uncertainty regarding people’s security and that of their rights and property. In the country, the most commonplace of inspectors or their peers in other ambits possess such enormous authority that they can decide on the opening or closing of a company or whether a person ends up in jail. In similar fashion, the powers of the regulatory entities are so vast that they can decide on things at will. So much arbitrary power makes it impossible to have a reliable and credible authority. Instead of having clear guidelines, the authority possesses great latitude, opening spaces of enormous impunity, thus arbitrary and illegitimate, and also dysfunctional. These excesses in turn translate into environments that facilitate the entrenchment of monopolistic practices, the taking of buildings or roads and violence. Or passing ludicrous laws. Recognition is key to observing that these elements comprise distinct sides of the same coin.

Under these circumstances, it would be absurd to pretend that more of the same type of regulations, laws or entities could end corruption: laws have consequences. What Mexico requires is to delimit the boundaries of the powers that the laws grant, open spaces of competition in all ambits, eliminate restrictions on trade and imports and, in a word, create conditions so that no one –government, enterprises, unions, political parties- would entertain the possibility of accumulating so much power or the capacity for imposition as happens now. When the playing field of this “power value chain” is more level, less biased and more equitable, the country could flourish.

Corruption and impunity, twin sisters, are the product of our political reality that takes root in laws and regulations. The reality will change when the game preserves from which these emanate are attacked, when bureaucratic faculties are well defined and delimited, eliminating arbitrariness, the mother of all corruption and impunity.

The electoral bill just passed by the Senate is a jewel of incentives for corruption and impunity. It would be desirable that it be dismissed outright by the Congress. If this does not happen, the citizenship better hope that the energy reform (that was exchanged for the electoral bill) at least justifies such an arbitrary law and the anti-democratic features it comes associated with.

www.cidac.org

@lrubiof

Luis Rubio

“The old is dying and the new cannot be born: in the interregnum a great variety of morbid symptoms will appear”. Thus wrote Antonio Gramsci in his Prison Notebooks. We Mexicans have much experience in these latter because, in the long run we’ve had decades of a series of transitions that have no beginning or end. In contrast to the handful of nations that achieved –due to circumstances or to exceptional leadership- constructing a negotiated transition, Mexico’s course has been a medley of true reforms, prejudices, competition and clashes with interests devoted to undermining the process. The challenges have come equally from Right and Left, bureaucracy and de facto (or veto) powers. On occasion due to apathy, on others due to the absence of vision or capacity for political delivery, the country has gone from being an authoritarian system to an undefined hybrid, steeped in contradictions and incomplete processes. I wonder whether the ongoing complexity in negotiating often ludicrous legislation (as with the political reform) or ideological battles around the energy bill could be explained in this dimension.

There are two examples that seem particularly relevant and on which there is so vast a literature that allows for a dispassionate and revealing reading. China is a country in which its government and party have planned down to even the time the sun comes out and, however, it experiences a process of change that is ever more less under the control of its authorities. The Eastern European countries supply a contrasting example because in these nothing was planned: their national and political evolution was due to a great extent to what happened in another latitude, the Soviet Union. Both cases cast light on the subject.

Robert Kaplan* has for years, and various books, been studying the Chinese evolution. His ideas may be summed up as follows: a) the era of the technocrats is coming to an end, giving rise to that of the politicians, and “politicians, even in liberal democracies, exploit people’s emotions. That could lead to more erratic, more nationalistic leaders”; b) the problem is not the democracy: “the problem in China is a vast and undisciplined State in the messy and decades-long process of liberation”; c) “Democratization in its initial stages in any society means a diminution in the power of the elite, and with the exception of totalitarian states  –which China is not anymore- the fall of the elites may lead to more intemperate policies in the short run”; and d) “the problem with authoritarian states is that if they remain in place for several decades, the only people who end up capable of running ministries and formulating policies are the authoritarian elites themselves. Thus, toppling such systems entails serious risks”.

Anne Applebaum**, expert in Eastern European countries, describes the relative success (or failure) of these nations in the following manner: “The factor most closely linked with stability and growth (in the Eastern European nations) is human: those countries that had an ‘alternative elite’ –a cadre of people who had worked together in the past, who had thought about government and who were at some level prepared to take it over- were far more likely both to carry out radical reforms and to persuade the population to accept them. Hungary, Poland –and, to a lesser extent, the Czech Republic, Slovakia and the Balkan states- all benefited from the presence of people who had been thinking about change, and organizing to carry it out, for a long time”. “Elsewhere, opposition groups had not been so well unified or repression had been much harsher. So when the Soviet Union disbanded, former communists –perhaps dressed up as social democrats or nationalists- took charge again. Some were better, some were worse.  On the whole, they did not press for radical change –because radical change was not in their interest”.

It appears evident that both perspectives offer lessons for Mexico. Like China, Mexico underwent an incomplete change in which, despite the alternation of parties in government, the authoritarian structures of yesteryear have not been dismantled nor has a body of civil servants that grew and developed independently of the old system been incorporated. As in the least successful nations of Eastern Europe, old PRIist functionaries remained in control of the State apparatus, rendering the approval and implementation of significant reforms more difficult. It’s sufficient to recall the way that the unions of the state entities were maintained unimpaired and untouched throughout this period or the way officials of the PRD and the PAN, respectively, adapted to the ancestral, corrupt, ways of governing.

Perhaps the main lesson that these examples offer is the fact that, in the absence of an explicit agreement among the elites (Spain, Chile or South Africa) or the total collapse of the former system (Eastern Europe), the future of a nation depends in good measure on the leadership capacity found at the moment. That is, there is an extraordinary element of luck in all of this. China is undergoing a huge process of change on a daily basis and has yet to see what type of landing it will have. For their part, the Eastern European nations have exhibited very distinct politico-economic ways in their transition process, some nations ending up in much better shape than others.

In his study on the (religious) Reform movement, the birth of Protestantism, Patrick Collinson*** affirms that “no revolution, however drastic, has ever involved a total repudiation of what came before it. What do revolutionaries have to work with but the ideas and aspirations that they have inherited? What was Stalin but a new kind of tsar? Thomas Hobbes pronounced “the Papacy is not other than the Ghost of the deceased Roman Empire, seated crowned upon the grave thereof”. “Jesus was not the first Christian, and Luther was not a Lutheran”. The political changes and transitions among systems take time and are never alike.

Mexico will have to find its own way, with the structures, persons and vision available to it. One paradox of our peculiar evolution is that the party that always proffered the radical reform (in the Applebaum sense) did not know how to head it nor did it have the grandeur to attempt it. Now it’s up to the PRI to try it, avoiding running into snags along the way as has occurred with the Chinese government. It is not surprising that when China “hit the wall” in the past few months, its government began searching for a new strategy. Mexico is not too far from experiencing a similar crash against the proverbial wall. As soon as that happens, the government will have to build a way out. The advantage is that a lot of planning doesn’t make the difference. Maybe, after one of these typically-Mexican slapdash ventures, things will turn out well for it.

*The China Puzzle.

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

***The Reformation.

www.cidac.org

@lrubiof

NEXOS – Luis Rubio

Over the last four decades, Mexicans had it all: governments that had no idea what they were doing and that ended up causing profound economic and social crises  (LE-A and JL-P), governments that dealt with crisis and strove to do the best possible (M-DLM and EZ), governments that understood the reality and sought to change it radically (C-SG) and governments that attempted to change but that lacked the interest or the vision (VF-Q) or the capacity (FC-H) to achieve it. What we hadn’t had was a government with the capacity and disposition for change but without the least concern for the reality that they were endeavoring to alter.

The point of departure of today’s government was simple and overwhelming: the country has not been advancing, the economy exhibits a very poor performance, poverty has not been diminished and the political structures don’t respond to the needs of the country nor do they resolve its problems. In a word, the country is adrift said the then-presidential candidate and to alter that course requires an effective government. Whether one shares the adopted strategy or not, no one could dispute the essence of the diagnosis.

What is significant is not the diagnosis or the fact that, beyond the  general indicators from which the statements of the previous paragraph derive, the solution proposal, the strategy followed throughout this first year of government, does not respond to a specific analysis of what exists, to a calculation of the economic or social variables, or to an analysis of the dynamic that characterizes the country in general and each of its components, but it is rather the product of the comparison of how the country operated “when it did function” with the current situation. The relevant comparison that today’s government is encountering is not surprising given the personal biography of the president and his home state, is with the era of stabilizing development (1940s-1960s). What’s apparent about that era is eloquent: order, high economic growth rates, little political conflict and a government with the capacities necessary to preside over the destiny of the country and to act in the face of its challenges.

My hypothesis is that the roadmap of the government arose from that conception and that its strategy resides in the reconstruction of the structures and characteristics of times long past with the objective of converting the president into the heart of the State and the government into the factotum of economic development. That is, it’s about a political response –a search for power- to the problematic that the country is experiencing on all fronts, a factor that perhaps explains the emphasis on matters of power as well as the absence of specific projects on matters that overwhelm the population, such as public security, justice, corruption, bureaucratic abuse and the appalling performance of the system of public expenditures at all levels of government.

With that rationale, the government’s first stage consisted of establishing a sense of order, a hierarchy of authority and a strong presidency a cut above the everyday strife. To advance it made exceptionally skillful use of communication to undertake initiatives that range from the implantation of form as a basic element in political relations (perhaps the best example of this was the extraordinary care with which the inaugural ceremony was organized) up to the arrest of the teachers’ union leader and the construction of the so-called Pact for Mexico. The government faced up to instituting itself as the political heart of the country, imposing conditions of dialogue with its counterparts, limiting the “de facto -or veto- powers”, canceling channels of alternate communication, stipulating rules for big business, marking a distance with the U.S. government and some of its agencies and, in general, placing itself above interests that, in the governmental diagnosis, had grown at the expense of the State.

The strategy unfolds with that same power criterion in each area of governmental activity. In the case of the economy, the priority interest is expanding public expenditures, thus the categorical imperative for the government rested on increasing fiscal tax collection and reducing the spending available to consumers and businesses. In a word, the development project is the government. The government is changing the development model of the past two-odd decades to one no longer based on market criteria but in a strategy of power as a means of achieving development. The new model is political to a greater extent than economic and the wager consists of whether its benefits will translate or not into a higher economic growth rate than that reached in past decades.

To the government’s credit, it can be said that for some time the need has been evident for a change in direction for the simple reason that what there was wasn’t working. The relevant question is whether the shift of course that the government has executed in the development model is likely to achieve, in the words of President Peña, the transformation of the country. It is evident that one of the great deficits, if not the main one in recent decades, has been precisely the absence and ineffectiveness of the government. In this respect, it is clearly necessary to reestablish a sense of order and authority.

The problem is that it is not only effectiveness that is necessary; a suitable project is also required. Within this context, the meager results to date should not come as a surprise. The government has promised effectiveness but has come up short, not only in realities but also above all in its project. Reforms have not been aligned with each other and often are lacking in substance. The country is much more complex that the State of Mexico and, as illustrated by presidential decisions and results in matters such as housing, the economic growth rate, the fiscal miscellany and the way it has permitted those opposed to different reforms to join forces, leadership has been much less effective than the discourse promised. The play-off between rhetoric and reality could lead equally to an integral project review, which would be desirable, and to a new vicious circle of inflation, leadership and crisis, multiplied by the political conflict and insecurity that underlie these.

The world has changed dramatically in the five decades since the so-called “stabilizing development” development model breathed its last owing to exhaustion. From this perspective, no matter how indispensable the government’s strength were to be, the characteristics that today make countries successful transcend the fact of possessing an effective government: the existence of an effective government is a necessary condition for development to be possible, but it’s not enough. With all of their avatars, what makes nations like Korea, Indonesia, Ireland, Poland, Colombia and Chile successful is the leadership quality that their governments have achieved. That leadership has served to persuade their populations, to convince them of their projects and, in a word, to procure the legitimacy of the government and of the governor. That leadership is not especially economic: it’s not the public expenditure that exerts an impact on the citizenry, convinces unions to accept governmental mediation and confers certainty on investors so that these will commit substantial resources with a long-term view.

What makes the government successful is that it is effective in what essentially corresponds to it and that implies solutions for fundamental problems –security, physical infrastructure, justice, education, etc.- and that all social actors will be brought on board (utilizing all the resources necessary). Development is not a power project: it is a result of the effective action of the State.

The success of the government will not depend on how many reforms it passes –a poor measure of comparison with former governments- but instead on the problems that these reforms resolve. To date, the tenor of the current government, above all in the legislative terrain, has been more an exercise of power –to demonstrate that this government indeed has the capacity to achieve basic reforms- than of advancing a coherent, profound and continuous project of transformation. The difference doesn’t lie in the capacity of political operation (condition sine qua non to make development possible) but in the substance of its project. This might appear to be the same thing but it isn’t.

www.cidac.org

@lrubiof

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