FORBES- Luis Rubio

In the independent Mexico there have been two eras of high economic growth: that of the Porfiriato at the end of the XIX Century and the good years of stabilizing development, between the forties and the end of the sixties of the XX Century. The political characteristic of both moments was centralization of power. In a country with such prominent geographic, ethic, demographic and physical dispersion and diversity, the centrifugal forces have always been enormous, the reason why it’s tempting to establish an automatic correlation between the two phenomena: control commensurate with growth; diversity and decentralization commensurate with chaos. However, this correlation is non-existent: there are many factors that intervene. More importantly, the era of globalization creates new realities that make it impossible to establish a causal relationship between political centralization and economic success.

To begin with, the context is decisive: with distinct characteristics, the common denominator between the Porfirio Díaz years and those of stabilizing development was the existence of a capacity of process control, information control and, above all, control of crucial factors such as financial stability, infrastructure development,   credit growth and control of the work force by means of the unions operating under the aegis of an all-powerful government. Some of these factors continue to be crucial to economic growth, but others are the product of the specific moment. The context matters and the current one has changed radically.

Today’s success factors include many of those from the past (such as infrastructure, financial stability and the existence of a functional government), but the key to add value resides in the capacity of individuals to furnish ideas, creativity and, in general, contributions that are the product of intellectual activity that raises productivity in the era of information and services, very distinct from that which preceded it in the agricultural and industrial ambit. In terms of their essence, two things have changed: physical force has been replaced by intellectual creativity and physical boundaries -like national borders- have ceased to be a limiting factor. At present commerce and the exchange of ideas are vital for growth. The importance and transcendence of the government has not changed: what has changed is the nature of its function.

Kofi Annan, former Secretary General of the United Nations, said that “we cannot wait for the government to do everything. Globalization operates on Internet time”. In effect, a government cannot do everything, but in an era of vast change, of permanent change in fact, what is crucial is for the government to adapt itself to the needs of the economy and the society, which undergo constant transformation. Of course, there are leading functions that do not change –such as maintaining the population’s social peace and security- but there are others that modify themselves constantly: some become obsolete, others take on unfathomable transcendence.

The new government has instated itself as a factor of control and of power. With this it has been able to devise the perception that the solutions to the dilemmas facing the country are found in its hands. This is no small achievement, above all after an era of conflict, violence and uncertainty that began in 1994 and only got worse. The presence of a government that emblemizes a sense of authority with its presence has been welcomed by the population. However, the form and content that it has exhibited to date is very similar to that of the sixties of the past century, as if it were keen on recreating that era. The problem is that both globalization as well as the factors that make success possible at present alters the panorama. Success today depends on the existence of a government that works but also on an economic strategy compatible with the reality of globalization and with the characteristics of an economy in which the manpower component is increasingly less relevant in terms of adding value. Instead of controlling the population, what must be created is an educative, health and cultural environment that favors the development of human capital; rather than control over the economy the key lies in promoting entrepreneurial activity, eliminating restrictions and allowing for constant change.

The key in the era of globalization resides in the capacity of individuals to create and add value as well as to increase productivity. The presence of a strong government with clearness of vision is a crucial factor in the process, as long as it plies this strength to engender conditions for progress and not merely for controlling the population. That is, in this historic era, control and development are contradictory.  If one desires to achieve the latter it will be imperative to employ the former with parsimony and intelligence.

www.cidac.org
@lrubiof

Luis Rubio

The country continues to be divided, not only in positions and preferences but also in the concept of how Mexicans find themselves as a society. For some Mexicans blocking a highway is something natural and acceptable: all’s fair in love and war. For others the blocking of a means of communication constitutes a constitutional violation. For the former the use of force is tantamount to repression, thus reprehensible and should never take place; for others, force is a central instrument of the rule of law. This is about not only views at cross-purposes but also about radically different lifestyles: for some “the worse the better”, for others “we’re just getting along”. In the last analysis, the deep-seated issues that confront Mexican society are never confronted: the division that stupefies the country and that hinders it from constructing a platform of development in which we all dovetail. None of this is new, but the terrible thing about it is that for fifty years Mexicans have been, at least since 1968, entangled in this labyrinth and there’s nothing to suggest that we have advanced even an iota.

It’s easy to assign blame, insults or epithets in every direction, as has happened with the roadblocks organized by National Coordination of Education Workers (CNTE) zealots, but that won’t get us very far. To the extent that these groups live within an environment or a power rationale distinct from that of those who accept the formal rules of the game (be these wrong, wanting or insufficient), the rules are inapplicable. From this perspective, it’s worthless to condemn a behavior when the selfsame objective of an individual who behaves in a determined manner is to make the opposition or reprehension of the normative framework felt that “others” consider valid. The contradiction is what lies at the heart of the level of conflict that the country is undergoing (without including organized crime, another matter entirely) and due to which, for decades, there has been not even an attempt at response.

Worse yet, the existence of views, positions and strategies at cross-purposes has fostered the development of an entire industry of political manipulation –created and fostered from the government and then found uncontrollable-, much of which is inspired less by great philosophical principles or ideals than by the most mundane pragmatism, known in the dictionary as blackmail and extortion. That’s how Mexico City became the oasis of demonstrations or how, instead of seeking solutions to the core problematic, some unions have preyed upon, some presidential candidacies have been launched solely on the basis of resentment, or how some politicians have taken refuge behind ever higher walls: the official presidential residence Los Pinos is a good example of this.

The blackmail industry today includes everyone: from the governor who appears to demonstrate alone in front of the National Palace to those who commandeer conflict in the most remote nook and cranny of the country to Insurgentes Avenue, not to resolve the problems of the indigenous but rather to nudge along their own personal cause. Between one thing and another are secreted dissidents, negotiators and blackmailers. But the underlying point is not the blackmail industry but the fact that in effect there is an essential cleavage at the heart of the country and the Mexican State.

In the old PRI era the country underwent daily mobilizations of this nature, but the system enjoyed the capacity, and generally the disposition, to act and to avoid reaching extreme situations. Although it was rare for a problem to be solved, at least it was equally rare for conflicts to reach unmanageable excesses. The gradual deterioration of governmental authority, the unwillingness to employ force and the mislaying of the compass ended up converting the government itself into the prey of blackmailers.  The generalized disorder that followed was the product of apathy: the old authoritarian rules were no longer applied due to fear of consequences in the media and a novel political concept to attack the heart of the problem was not developed. The two PANist governments changed neither the logic nor the tendency. Thus their debt to the society is so great: contrary to their historical buildup, they abandoned the citizenry and exerted no effort other than continuing to pave the road to perdition.

In the face of this reality, the new government has responded in two ways: it has reorganized the structures of real power in order to recover the misplaced authority and, as occurred on the Acapulco highway, has taken action to submit the troublemakers to minimal rules of civility. This concerns two sides of the same coin: to be the authority and to exercise it before anyone who challenges it. The immediate result has moreover been commendable. The government achieved attenuating the immediate matter: however, as can be seen daily, that does not constitute a solution to the underlying theme.

Blackmail only ends when the source of the extortion is eliminated or when his/its motive is resolved. In the youthful years of the old system the former was carried out but later nothing else was done: the blackmailers were not eliminated nor were the causes of the problem attacked, which gave rise to the proliferation of blackmailers. The exercise of the authority attacks the front line but nothing else. The question is what can actually be done.

The following quotation captures the essence of the problem and, because it has nothing to do with Mexico, it seems to me that it allows one to take a less caustic and more dispassionate perspective of the nature of our challenge: “The tragedy of al Assad family rule is Syria is not that it produced tyranny”, says Robert Kaplan. “That tyranny, remember, produced sustained domestic peace after 21 changes of government in the 24 years preceding the elder el Assad’s coup… The tragedy is that the al Assads did nothing useful with the domestic peace they had established. They did not employ the order they had created to build a civil society, one that would have prevented the current war. They never converted their subjects into citizens: Citizens rise above sectarianism, whereas subjects have only sectarianism to fall back on”.

Recent events in the state of Guerrero show the worst of the old political system, together with the risks of dangerous alliances with organized crime. But the solution dwells on a political realignment with the will to employ force to make it stick. The Acapulco highway roadblock and the action by the group that is responsible and its leaders are nothing other than sectarian responses to a system with which they do not identify. They do not see that the system benefits them or that they can advance their legitimate interests via the negotiation route, because they are not, nor they feel themselves to be, citizens. They feel that they are subjects and, as such, they defy the government. The mechanism of blackmail worked very well for decades. But today the government is wrong if it thinks that it is going to dissuade them with a couple of shows of authority. What’s required is a change in the basic conception of what are the government and the citizenry. It will not be easy, but it’s the only way to break the impasse.

www.cidac.org

@lrubiof

Luis Rubio

The country continues to be divided, not only in positions and preferences but also in the concept of how Mexicans find themselves as a society. For some Mexicans blocking a highway is something natural and acceptable: all’s fair in love and war. For others the blocking of a means of communication constitutes a constitutional violation. For the former the use of force is tantamount to repression, thus reprehensible and should never take place; for others, force is a central instrument of the rule of law. This is about not only views at cross-purposes but also about radically different lifestyles: for some “the worse the better”, for others “we’re just getting along”. In the last analysis, the deep-seated issues that confront Mexican society are never confronted: the division that stupefies the country and that hinders it from constructing a platform of development in which we all dovetail. None of this is new, but the terrible thing about it is that for fifty years Mexicans have been, at least since 1968, entangled in this labyrinth and there’s nothing to suggest that we have advanced even an iota.

It’s easy to assign blame, insults or epithets in every direction, as has happened with the roadblocks organized by National Coordination of Education Workers (CNTE) zealots, but that won’t get us very far. To the extent that these groups live within an environment or a power rationale distinct from that of those who accept the formal rules of the game (be these wrong, wanting or insufficient), the rules are inapplicable. From this perspective, it’s worthless to condemn a behavior when the selfsame objective of an individual who behaves in a determined manner is to make the opposition or reprehension of the normative framework felt that “others” consider valid. The contradiction is what lies at the heart of the level of conflict that the country is undergoing (without including organized crime, another matter entirely) and due to which, for decades, there has been not even an attempt at response.

Worse yet, the existence of views, positions and strategies at cross-purposes has fostered the development of an entire industry of political manipulation –created and fostered from the government and then found uncontrollable-, much of which is inspired less by great philosophical principles or ideals than by the most mundane pragmatism, known in the dictionary as blackmail and extortion. That’s how Mexico City became the oasis of demonstrations or how, instead of seeking solutions to the core problematic, some unions have preyed upon, some presidential candidacies have been launched solely on the basis of resentment, or how some politicians have taken refuge behind ever higher walls: the official presidential residence Los Pinos is a good example of this.

The blackmail industry today includes everyone: from the governor who appears to demonstrate alone in front of the National Palace to those who commandeer conflict in the most remote nook and cranny of the country to Insurgentes Avenue, not to resolve the problems of the indigenous but rather to nudge along their own personal cause. Between one thing and another are secreted dissidents, negotiators and blackmailers. But the underlying point is not the blackmail industry but the fact that in effect there is an essential cleavage at the heart of the country and the Mexican State.

In the old PRI era the country underwent daily mobilizations of this nature, but the system enjoyed the capacity, and generally the disposition, to act and to avoid reaching extreme situations. Although it was rare for a problem to be solved, at least it was equally rare for conflicts to reach unmanageable excesses. The gradual deterioration of governmental authority, the unwillingness to employ force and the mislaying of the compass ended up converting the government itself into the prey of blackmailers.  The generalized disorder that followed was the product of apathy: the old authoritarian rules were no longer applied due to fear of consequences in the media and a novel political concept to attack the heart of the problem was not developed. The two PANist governments changed neither the logic nor the tendency. Thus their debt to the society is so great: contrary to their historical buildup, they abandoned the citizenry and exerted no effort other than continuing to pave the road to perdition.

In the face of this reality, the new government has responded in two ways: it has reorganized the structures of real power in order to recover the misplaced authority and, as occurred on the Acapulco highway, has taken action to submit the troublemakers to minimal rules of civility. This concerns two sides of the same coin: to be the authority and to exercise it before anyone who challenges it. The immediate result has moreover been commendable. The government achieved attenuating the immediate matter: however, as can be seen daily, that does not constitute a solution to the underlying theme.

Blackmail only ends when the source of the extortion is eliminated or when his/its motive is resolved. In the youthful years of the old system the former was carried out but later nothing else was done: the blackmailers were not eliminated nor were the causes of the problem attacked, which gave rise to the proliferation of blackmailers. The exercise of the authority attacks the front line but nothing else. The question is what can actually be done.

The following quotation captures the essence of the problem and, because it has nothing to do with Mexico, it seems to me that it allows one to take a less caustic and more dispassionate perspective of the nature of our challenge: “The tragedy of al Assad family rule is Syria is not that it produced tyranny”, says Robert Kaplan. “That tyranny, remember, produced sustained domestic peace after 21 changes of government in the 24 years preceding the elder el Assad’s coup… The tragedy is that the al Assads did nothing useful with the domestic peace they had established. They did not employ the order they had created to build a civil society, one that would have prevented the current war. They never converted their subjects into citizens: Citizens rise above sectarianism, whereas subjects have only sectarianism to fall back on”.

Recent events in the state of Guerrero show the worst of the old political system, together with the risks of dangerous alliances with organized crime. But the solution dwells on a political realignment with the will to employ force to make it stick. The Acapulco highway roadblock and the action by the group that is responsible and its leaders are nothing other than sectarian responses to a system with which they do not identify. They do not see that the system benefits them or that they can advance their legitimate interests via the negotiation route, because they are not, nor they feel themselves to be, citizens. They feel that they are subjects and, as such, they defy the government. The mechanism of blackmail worked very well for decades. But today the government is wrong if it thinks that it is going to dissuade them with a couple of shows of authority. What’s required is a change in the basic conception of what are the government and the citizenry. It will not be easy, but it’s the only way to break the impasse.

www.cidac.org

@lrubiof

Luis Rubio

All the evaluations of the problems of the Mexican economy usually include: lack of credit, industrial plant competitiveness and the competition from (mostly Chinese) imports. Each of these symptoms possesses its own dynamic and structure of causality; what the three have in common is that, at heart, it’s the same problem.

First off, credit. A permanent perennial complaint of business, and not a few politicians, is that referring to the Mexican economy’s relatively low level of banking penetration and, above all, the participation of credit as a percentage of the GDP. Participation of the Mexican banking system in the economy is less than in other similar economies but there are reasons that explain the difference. In Brazil, the total credit amount given to persons and businesses represented approximately 60% of the GDP in 2012, compared with 27% in Mexico. Of this 60% in Brazil, the BNDES development bank represented 21% of the GDP, that is, one third of the total credit. Taken as a whole, everything would indicate that one explanation of Mexico’s growth problems derives from the absence of credit.

More careful analysis reveals transcendent factors. On the one hand, in contrast with private banks, BNDES has taken enormous credit risks and has assumed huge liabilities of private companies. Many analysts anticipate that much of its portfolio will end up on the list of bad debts. Time will tell. With this, the numbers that are indeed comparable are 49 vs. 27, that is, a difference of 22 percentage points, not few, and that perhaps is basically explained by the nineties’ banking crisis in Mexico, which generated a financial culture much less risk-tolerant than that which formerly existed. But there is another factor that is much more revealing: the issuance of credit to both large companies and consumers is similar to the Brazilian numbers. The great difference resides in the small and medium industrial sector, where credit is all but not extended in Mexico.

The productive plant’s low competitiveness is perhaps where the main problem of national industry resides. If one listens to the sector’s businessmen, the explanation alludes to a matter of credit, the absence of support and protection on the part of the government, the informal economy and smuggling, that is, the third factor. The credit issue is real but circular: there is no credit because companies are not competitive and they are not competitive because there is no credit. The banks affirm, rightly so from my perspective, that it is not possible to extend credit to enterprises lacking a viable and competitive investment project, one likely to make these companies successful in a globalized economy. The demand for protection in the form of subsidies and tariff and non-tariff barriers to trade (a demand ever more successful in this administration) confirms what the banks say: that these companies are trying to stay alive not through their ability to produce good products at fair prices that the market demands but rather by means of protection granted to them by the government with respect to their competitors. Increasing credit through Mexico’s development bank NAFINSA would not address this problem.

In its essence, the country’s industrial problem is a mismatch between theory and reality. Up to the eighties, the structure of the Mexican economy was not very distinct from that of the Brazilian one. The development model adopted after WWII was oriented toward promoting industrial growth by means of subsidies and protection from imports. The objective was to achieve the growth of a powerful local industry through import substitution. The model favored the producer over the consumer and ended up creating a negligibly competitive industry that typically produced high-priced, low-quality goods. In the eighties, the Mexican government opted for trade liberalization with the objective of heightening the competitiveness of the economy and, through that, improving the quality and price of the goods it produced, but above all facilitating a rapid growth in overall productivity that would translate into better and higher paying jobs.

Behind the decision to liberalize lies a well known principle among scholars of the economy: that of the comparative advantage. On one occasion, the mathematician Stanislaw Ulam asked the economists’ dean of his era, Paul Samuelson, whether there were an economic principle that was, concurrently, universal and not evidently true. Samuelson immediately responded with David Ricardo’s principle of the comparative advantage, developed in 1817. Under this principle, what’s important for an economy is not its absolute capacity and ability to produce goods, but its relative capacity and ability with respect to others.

Although a country produces many things, each economy is more efficient in the production of some goods than others. Under this premise, international commerce leads a country to specialize in some type of goods that it also will export, while it imports others in which it is less efficient, thus achieving a greater level of well-being. The principle is well established and there is no doubt of its functioning. The problem is how to apply it in an economy operating under the premise of the virtual inexistence of international trade, our case until the eighties.

According to the economic theory, on liberalizing the Mexican economy, the country would have specialized in a certain type of goods (such as electronics, automobiles, engines, aviation fruits and vegetables, meat, etc., that is, all of the sectors in which Mexico is brutally competitive as an exporter) and would have abandoned other sectors in which it does not possess comparative advantages and that only existed as the result of the protection and subsidy strategy of before. Some of this did occur, which explains the disappearance of many enterprises in sectors such as toys and textiles but, thanks to the persistence of direct and indirect protection mechanisms, many companies that normally would have had to transform themselves or perish are still functioning. A few benefit at the cost of a general lesser growth of the economy.

The country is facing a dilemma that has not been resolved since the moment trade was liberalized, nearly thirty years ago: entering full speed ahead toward the construction of a modern productive plant or persisting in the protection of one sector that, as such, has no future. It can persist, but the cost is growing and can be measured in the form of bad and poorly paid jobs, low levels of economic growth and, above all, minimally productive jobs that inevitably pay the poor salaries.

www.cidac.org

@lrubiof

FORBES

Luis Rubio

One of the virtues that many scholars attribute to democracy is that nations adopting it tend to be less violent and much less inclined to enter into conflicts with others. According to this, democracy obliges governments and populations to resolve their problems through negotiation, which ordinarily debars open conflict. The theoretical logic is impeccable: a) political leaders in a democracy are required to respond to their electorate and, if they lose a war, they lose at the ballot box; b) democracies possess a natural proclivity to abstain from viewing other actors as hostile: all are potential allies; and c) democracies typically develop sturdier economic strategies, which in the main are not compatible with military conflicts. In a word, democratic leaders lack incentives to fight.

The Arab Spring was widely acclaimed, in part because of the end of authoritarian or military governments that it entailed, but also owing to the presumption that this would diminish regional conflict. I ask myself whether there are lessons that we can derive from this experience in Mexico, as much for the enthusiasm at the outset as for the disenchantment downriver.

In Mexico we have been privileged not to live in the vicinity of neighbors prone to war, at least not in the last one hundred fifty years, a circumstance that’s afforded us the luxury of feeling ourselves to be immune to these matters. When encountering conflicts, Mexicans tend to support those we identify as the victim but without an inherent awareness of what war denotes. According to some historians, the very notion of “Mexicanness” was born with the United States’ invasion of Mexico in 1847, but the sense of victimhood, said Octavio Paz, stems from pre-Colonial roots. History and neighborhood have dealt us a sui generis perspective of wars.

That from which we haven’t been exempt from is internal conflict. Beyond organized crime, the country currently withstands an untold number of conflicts that reveal a pre-democratic political state. Conflicts such as those of Oaxaca and their supposed educators, the seizure of buildings and universities in Mexico’s Federal District, work stoppages, and demonstrations designed to affect the citizenry or to close highways, are nothing but tangible examples of a pre-democratic political system. The conflicts are not resolved in the political instances (such as the Congress) or in the judicial ones. Instead of negotiation, militants employ instruments of force and pressure oriented toward imposing solutions. Certain politicians and parties are more apt to utilize this type of means, but overall, the differences are not dramatic. When a party is not in power they use anti-institutional instruments of pressure that they would never tolerate were they in power.

From this perspective, although we are unacquainted with war as a political instrument, national politics continues to evidence nondemocratic facets and methods of conflict resolution typical of corporativist, or authoritarian, political systems. Manifestations of this nature are only possible when their utilization produce results. That is, while the authority continues to favor conflict resolution in the streets above institutional instances, the conflict will go on. All are rational actors.

This should not be understood as a call for the use of firm-handedness. A government decided on favoring the institutionalization of political processes would have to progressively force –without violence but with authority- political actors to incorporate themselves into these circuits. As exemplified by union leaders who allied themselves with the government after the detention of the teachers’ union kingpin or by the owners of the telecommunications entities commending an action that severely affected the value of their companies, all the actors are rational: they all know how to read the political maneuvers and they adjust to the new reality.

A government determined to establish new rules of the game would have to begin by constructing a novel institutional structure susceptible to contributing to the achievement of these objectives. To endure, a process of political change cannot depend on how a person or a government acts, but rather on the existence of permanent rules that only institutions can underwrite.

Democracy, noted Joseph Schumpeter, is nothing more than a method for making decisions that leaves political actors no option but to submit to the normative framework and not tolerate conduct foreign to this. In Holland, the head of the Liberal Party once affirmed that he would never offend any other member of parliament because “one never knows with whom one will be required to forge a coalition in the future”. Such is the spirit of an institutionalized society.

www.cidac.org

@lrubiof

The Christian Science Monitor –
Opinion- April  17, 2013.

  Opinion

The Mexican government cannot afford the luxury of ignoring what is happening on immigration reform in the big and powerful North. And yet, it has taken a passive attitude. There are good historical reasons for this, but not a good one today.

By Luis Rubio / April 17, 2013  

Sens. John McCain (R) (left) and Chuck Schumer (D) walk away after speaking to reporters about their meeting with President Obama on a bipartisan immigration reform bill April 16. Oped contributor Luis Rubio writes: Mexico ‘should be willing to commit to a broad migratory arrangement whereby it would control the flows of future potential migrants moving from or through Mexico’s territory.’

Kevin Lamarque/Reuters

MEXICO CITY

The Mexican government cannot afford the luxury of ignoring what is happening on immigration reform in the big and powerful North. And yet, it has taken a passive attitude. There are good historical reasons for this, but not a good one today.

Within the Mexican government as well as in Mexican society at large there are two clearly differentiated positions vis-à-vis the immigration debate in the United States. Some people consider the migratory theme an internal matter of the US and some consider it a matter of national interest for Mexico. The former would prefer to put on blinders; the latter would embark upon a crusade. Each has relevant arguments to support their claim.

OPINION: 3 views on how US should combat illegal immigration

Those who would rather stay aloof believe that immigration is a domestic issue because it involves what is most essential to any nation: the composition of its society. A sovereign government has the authority to decide on the legal treatment of people that may have violated its laws at the very instant of entering the country or when overstaying the time permitted on an entry stamp. Those taking this position do not want to tell the US what to do because they don’t want the US to tell Mexico what it should do on this or other hot topics.

Then there are those who see the other side of the coin. More than 10 percent of the country’s population lives outside of Mexico, the vast majority of them (97 percent) in the US. This constituency is directly linked with a large part of the population (siblings, parents, children) back in Mexico. In some Mexican states, those connections represent more than half of the total number of its inhabitants. The government cannot ignore the obvious. Whatever decision the US ends up making on immigration, Mexico and Mexicans will be greatly affected. Hence, as much as the government might wish to lie low, this debate concerns vital matters that cannot be skirted.

As a result, Mexico’s government seems to be straddling both views. On the one hand, the government is preparing Mexican consulates (a network of 51 offices directly linked to Mexican communities in the US, including Puerto Rico) to inform those potentially affected of the possible legal changes – and of their rights. Second, it is actively stating its position and preferences and, most likely, proposals that would help control future flows of workers in exchange for a broad liberalization for those already in the US. Finally, it is preparing to work with communities that are most affected by migrants in order to allay fears and advance its own perspective on the matter.

A decade ago, Mexico’s government went out on a limb trying to advance legalization of those Mexicans working without papers in the US. Although there are disputes as to how advanced that process was, the fact is that September 11, 2001 ended all discussions and the then-Mexican president, Vicente Fox, was left with nothing to show for his efforts.

The current government wants neither to bet its success on decisions made in another country, nor to exert undue influence on the political process of a sovereign nation. In between these two positions, it is attempting to find a way to be a partner in the solution of a problem rather than the cause of one.

Mexico’s government needs to make the case that migrants move North because there is demand for their labor there. Since there is no welfare or unemployment support for this cohort, people go when there are opportunities. There have been no work opportunities in the last few years and, therefore, potential migrants have stayed home. If Mexico’s economy continues to improve, there will come a time when no Mexicans will move North. By the same token, as long as there is demand for low-skilled workers, they will continue flowing from Mexico or other nations. For the immigration reform to be successful, this reality needs to be incorporated into the new law.

OPINION: Immigration reform needs flexibility on work visas

As the Mexican economy attempts to create the foundations for a strong economic-growth era, the interest of the Mexican government is for Mexicans already in the US to secure a decent life. If that is secured as part of the US immigration-reform process, Mexico should be willing to commit to a broad migratory arrangement whereby it would control the flows of future potential migrants from or through Mexico’s territory, whether they be Mexicans or other nationalities.

Mexico’s government has never attempted to manage or hinder the flows of Mexican migrants to the US, considering that it is the constitutional right of any citizen to move about unimpeded. Committing to a change in this policy would entail a radical departure from Mexico’s history as well as establish a transcendent legal precedent. The government would also be committing to stem flows not only from countries that are of concern to the US – Middle Eastern and the like, which it has controlled at least since 2001 (several Mexican immigration jails are full of migrants from all continents) – but also from Central American nations that do not constitute a security threat for the United States.

If Mexico commits to stemming immigration flows to the US, it could become a major source of stability for the immigration policy that the US decides to adopt. In fact, it could help the US establish a more rational and realistic mechanism to regulate migratory flows, just as other nations, such as Canada and Australia, do.

Luis Rubio is chairman of CIDAC, Center of Research for Development, a think tank in Mexico Cityand a writer of more than 40 books on Mexican politics and economics. He writes a weekly column for Mexico’s Reforma newspaper.

http://www.csmonitor.com/Commentary/Opinion/2013/0417/Mexico-should-take-a-more-active-stance-on-US-immigration-reform?nav=87-frontpage-entryCommentary

Luis Rubio

“The errants are many,” said Sancho Panza. “Many,” replied Don Quixote, “but few they who deserve the name of knights.” Institutions are not born strong: they gain strength –or lose it- insomuch as they comply with their duty and win the respect of the citizenry. It’s not sufficient for institutions to just exist (the product of a political act, usually in the form of a legislative decision); institutions become part of the social fabric if the society embraces them and accepts them as their own. When this does not happen, institutions turn into vacant buildings without credibility. The majority of our “autonomous” and regulatory entities (but certainly not all) have failed to acquire recognition and legitimacy in the eyes of the populace because they have not understood the moment, their own function or the circumstances the country is undergoing. One example of this is the Federal Competition Commission, COFECO.

The Spanish monarchy from the death of Franco is a good example of how an institution is constituted and consolidated. Although the dictator angled his succession making use of Spain’s present-day monarch, King Juan Carlos, as a means of continuity, the monarchy was consolidated and accepted by the society only when Lieutenant Colonel Tejero attempted a coup five years later. It was at that moment that the king became the key factor for stability and the return to democratic normalcy, that the monarchy illustrated its transcendence and the importance of its function.

The viability, transcendence and credibility of an institution depend on the manner in which those in charge preside over it. The Federal Electoral Institute (IFE) secured its place in part due to the work of its board, but it is not possible to ignore that luck played a stellar role: if the politically correct candidate had not won in 2000, the IFE’s credibility would have been negligible. Not by chance did it suffer a brutal and visceral attack in 2006, so great that it rendered feasible the removal of its board, as if the latter were of no account. It never achieved consolidating its legitimacy.

When young, an institution must gain credibility in its sphere of action. In countries with strong and well developed institutions, the creation of a new entity does not constitute a major challenge and, although the new institution must win over its space and legitimacy, the environment tends to facilitate this. The situation is very distinct in a country like Mexico, where the concentration of power has been vast, the political life dominated by a single party and such a feeble separation of powers. Within a context of opacity, corruption, petty fiefdoms, “strong” and “moral” leaders, the incorporation is not painless of entities designed to professionalize the exercise of power, guarantee access to information, regulate economic activity and make possible the transparency of public and political activity. This is about a clash of concepts, principles, practices, traditions and, no less important, interests. It is, to say the least, an enormous contradiction.

In a context like this, a new entity must develop a strategy to accredit its viability, gain the acceptance of the population and forge its legitimacy. The COFECO came into being at the moment that economic liberalization began. The government was abandoning a direct form of control and supervision of the economy and started to construct a new scheme, within the context of an open economy, privatization processes of companies and a generalized deregulation of economic activity. The new commission was born with the crucial mandate of ensuring that markets in the Mexican economy were competitive, that is, that there were no monopolistic policies, that the regulations did not favor certain players over others, above all for the benefit of the consumer.

It was not an easy mandate, given the oligopolistic nature of the economy. It was also not easy because of the existence of massive enterprises, some recently privatized, controlling entire sectors and concentrating the attention of consumers, analysts and critics. The Commission had two options: take a stand against the big issues or against the less visible but similarly important ones. One must not lose sight of that the phenomenon of concentration is reproduced at all levels, in all regions and sectors. Going against the big issues and companies implied going against entities with lots of cash and lots of power; going against the smaller ones would have implied blows perhaps less sensationalistic but maybe more profitable for the consolidation of the entity. The correlation of power surely would have been distinct, less unfavorable.

The COFECO opted for the visible without recognizing the risk in which it was incurring. On taking a stand against the big ones, it also went against the powerful: with chock-full moneybags for contracting top-notch lawyers and procuring injunctions, political relations on all sides and an infinite capacity to corrupt. It is not by chance that, after years of failed attempts, it has very little to show as tangible results. It opened investigations and legal proceedings against the majority of the companies and sectors that, rightly or not, are associated with monopolistic practices or consumer abuse. However, the few battles that the Competition Commission won were in the end pyrrhic. Some are still at the let’s see stage. Two decades after its creation it has little or nothing to show in terms of consumer benefits that comprises, supposedly, its mandate. It’s not by chance that its credibility is so flimsy and why politicians cast about seeing how to modify it –and, conceivably, replace its board- one more time. The case of the IFE is suggestive.

Of course, there’s nothing wrong with zeroing in on the largest and most visible matters and companies, except that, when it’s about questions of power –a frail institution in the face of some perfectly established monsters- the probability of winning is minuscule. Perhaps the new injunction (amparo) law will open spaces and opportunities that have been impossible to date, but even under this circumstance it is not possible to ignore the obvious –and the irony for an entity that pretends to be autonomous- that this legislative change was possible solely thanks to presidential imposition.

Perhaps the result would have been another had the commission concentrated on more limited markets but with a greater possibility of success. Some industries that are obvious to me, but clearly not exclusive, are: that of industrial gases, dominated by two entities that, it appears, communicate with each other; auto-transport both of cargo and passengers, which have split the market amongst themselves; and that of the famous “tags” for the toll highways, which allow for individual monopolies. There is no lack of examples of consumer abuse and CONFECO’s ineffectiveness.

A few perceptible triumphs for the consumer would have helped consolidate an effectively anonymous commission, one not always dependent on governmental fiat. We will have to start anew, one more time.

www.cidac.org
@lrubiof

Luis Rubio

In one of his famous long-winded harangues, President Lincoln tossed out a rhetorical question that applies to our pseudo debate on energy matters. “How many legs does a dog have if you call the tail a leg? Four”, he said in answer to himself. “Calling a tail a leg doesn’t make it a leg”. The world of energy has changed radically but we’re still stuck in 1938. The problem is that if we don’t shatter the inertia we risk economic collapse.

Until some years ago the discussion on oil and, in general on energy, was a combination of wishes, real or potential benefits and history. Depending on the economic, political, or bureaucratic perspective, some see oil as kick-starter for today’s development, others as a stockpile of wealth for an indeterminate future. Although time is not the sole factor in this controversy, it does constitute a determining factor in the political dynamic in this respect because it entails the entire thicket of myths, ideologies, interests, history and objectives enmeshed in this matter. The theme is complex owing to the admixture of issues: those not wanting to change because this would affect their interests, those seeing change as an opportunity and those opposing change as an ideological stance. That is to say, it verges on a religious discussion where what to render to Caesar and what to render to God are pitted against each other and the combination thereof is never felicitous.

Independently of the specific perspective, no one doubts the fiscal importance of the oil resources. The Mexican Government has become addicted to the revenue generated by the oil monopoly and this converts it into as interested an actor in the debate as any other. Thus, what is in dispute is not something objective but rather the product of feuds and clashes among interested parties. This circumstance has brought one reform after another to a standstill throughout recent times.

The Mexican energy debate has entertained a further peculiarity: it is altogether inward facing. Mexico is conceived of as an exceptional entity, isolated from the rest of the world. There are good reasons for this: PEMEX is a fountainhead of resources and the more it exports the greater the income. The equation was so simple and obvious that everyone essentially focused on attempting to resolve problems related with production. When the petroleum platform began to drop off, discussion was oriented toward where and how to exploit new resources and the conditions needed to make this possible. For example, in the case of extracting the energy resources presumably localized at great depths in the Gulf of Mexico, third-party participation was regarded as necessary whether due to the lack of the required technology or to the inherent financial risk. With advances or without them, for many years the discussion has been limited to the exploitation of petroleum.

The reality has changed and that old discussion has become absolutely irrelevant. Although issues concerning PEMEX’s efficiency, its productive processes or its costs structure continue to be relevant as it pertains to PEMEX itself, we are at present witnessing a sweeping change in the energy industry, of which PEMEX is just one more actor. And that’s the problem: the energy issue is no longer about PEMEX but about Mexico’s development within the context of the energy revolution that the world is experiencing, but above all in our backyard: the energy panorama in the U.S. and Canada has changed drastically, to the degree that it puts the viability of Mexico’s economy at risk.

For twenty years, the country has survived thanks to NAFTA. This instrument has permitted the Mexican economy to rely on it as an enormous source of demand and investment, ensuring the success, insufficient as it may be, of the productive plant. The country has become a formidable exporter of industrial goods and that has generated jobs and growth. Without NAFTA Mexico would have continued on in crisis. On the other hand, NAFTA is no more than an instrument and cannot be equivalent to the “philosopher’s stone” quested for by medieval alchemists to resolve all problems. There are many things that would need to be done to raise the economy’s productivity, improve the population’s human capital and level the playing field for companies and investors alike with the purpose of introducing competition into the marketplace. All this would allow these to advance, but would not sort out the new energy panorama that, in fact, could place the economy in check.

A revolution has suddenly caught the world of energy, first in Canada and more recently in the U.S. This has to do largely with a technology-driven revolution originating essentially in changes in the way to extract energy resources, which has permitted the production of gas and oil to rise dramatically. It started as a process nearly sotto voce that, at its initiation haltingly and more recently in a determined way, has had the dual effect of flooding the energy market and slashing its prices, above all of gas. The U.S., the prime importer of petroleum worldwide, is a stone’s throw from being self-sufficient. An energy scenario that we have not had to contend with before: one that nobody thought could be possible.

In this fashion, the political dynamic that encases the discussion’s context of the potential energy sector reform has changed radically. What doesn’t seem to be clear is whether the conscience exists among those responsible for the discussion on the nature of the revolution that’s in the works or of its implications for Mexico.

Three factors distinguish this revolution: first, the fact that the U.S. could be self-sufficient in petroleum. Second, natural-gas prices in that country are now a fraction of those typifying their competitors in the rest of the world (less than 3 dollars per BTU vs. more than 20 in Europe or China). And, third, energy costs are leading to the renaissance of the manufacturing industry in the U.S. Unless Mexico finds a way to supply natural-gas (or an equivalent source of energy) to its own industry at similar, competitive prices, the whole industrial platform –and the country’s economy- could be at risk.

The challenges are obvious: the oil that the U.S. and Canada produce is much lighter than Mexican oil, rendering it much more attractive for refining; our advantage in terms of the cost of manpower pales in the face of the difference in natural-gas prices: i.e., there’s an urgent need for cheap gas in Mexico. In a word, perhaps exaggerating, but not by much, unless Mexico acts decisively on the energy front, it could end up with no market for its oil and without and industry. This scenario suggests that the urgency for a profound reform of the energy sector is infinitely greater than what our politicians comprehend. They’d best update themselves on the double.

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@lrubiof

FORBES – Luis Rubio

One of the virtues that many scholars attribute to democracy is that nations adopting it tend to be less violent and much less inclined to enter into conflicts with others. According to this, democracy obliges governments and populations to resolve their problems through negotiation, which ordinarily debars open conflict. The theoretical logic is impeccable: a) political leaders in a democracy are required to respond to their electorate and, if they lose a war, they lose at the ballot box; b) democracies possess a natural proclivity to abstain from viewing other actors as hostile: all are potential allies; and c) democracies typically develop sturdier economic strategies, which in the main are not compatible with military conflicts. In a word, democratic leaders lack incentives to fight.

The Arab Spring was widely acclaimed, in part because of the end of authoritarian or military governments that it entailed, but also owing to the presumption that this would diminish regional conflict. I ask myself whether there are lessons that we can derive from this experience in Mexico, as much for the enthusiasm at the outset as for the disenchantment downriver.

In Mexico we have been privileged not to live in the vicinity of neighbors prone to war, at least not in the last one hundred fifty years, a circumstance that’s afforded us the luxury of feeling ourselves to be immune to these matters. When encountering conflicts, Mexicans tend to support those we identify as the victim but without an inherent awareness of what war denotes. According to some historians, the very notion of “Mexicanness” was born with the United States’ invasion of Mexico in 1847, but the sense of victimhood, said Octavio Paz, stems from pre-Colonial roots. History and neighborhood have dealt us a sui generis perspective of wars.

That from which we haven’t been exempt from is internal conflict. Beyond organized crime, the country currently withstands an untold number of conflicts that reveal a pre-democratic political state. Conflicts such as those of Oaxaca and their supposed educators, the seizure of buildings and universities in Mexico’s Federal District, work stoppages, and demonstrations designed to affect the citizenry or to close highways, are nothing but tangible examples of a pre-democratic political system. The conflicts are not resolved in the political instances (such as the Congress) or in the judicial ones. Instead of negotiation, militants employ instruments of force and pressure oriented toward imposing solutions. Certain politicians and parties are more apt to utilize this type of means, but overall, the differences are not dramatic. When a party is not in power they use anti-institutional instruments of pressure that they would never tolerate were they in power.

From this perspective, although we are unacquainted with war as a political instrument, national politics continues to evidence nondemocratic facets and methods of conflict resolution typical of corporativist, or authoritarian, political systems. Manifestations of this nature are only possible when their utilization produce results. That is, while the authority continues to favor conflict resolution in the streets above institutional instances, the conflict will go on. All are rational actors.

This should not be understood as a call for the use of firm-handedness. A government decided on favoring the institutionalization of political processes would have to progressively force –without violence but with authority- political actors to incorporate themselves into these circuits. As exemplified by union leaders who allied themselves with the government after the detention of the teachers’ union kingpin or by the owners of the telecommunications entities commending an action that severely affected the value of their companies, all the actors are rational: they all know how to read the political maneuvers and they adjust to the new reality.

A government determined to establish new rules of the game would have to begin by constructing a novel institutional structure susceptible to contributing to the achievement of these objectives. To endure, a process of political change cannot depend on how a person or a government acts, but rather on the existence of permanent rules that only institutions can underwrite.

Democracy, noted Joseph Schumpeter, is nothing more than a method for making decisions that leaves political actors no option but to submit to the normative framework and not tolerate conduct foreign to this. In Holland, the head of the Liberal Party once affirmed that he would never offend any other member of parliament because “one never knows with whom one will be required to forge a coalition in the future”. Such is the spirit of an institutionalized society.

www.cidac.org

@lrubiof