Luis Rubio

It never fails. As dawn heralds each new day, on the initiation of each governorship or municipal presidency complaints begin to flow on the excessive debt that the previous administration acquired. The scene is typical: the new governor arrives at his post with enormous plans and projects, only to find himself with empty coffers and, worse, that the funds that the entity will receive were already mortgaged by his predecessors. This structural problem will not be resolved until the conditions that create it change.

The perennial discussion reminds me of a Hindu legend that I once read. According to the tale, apparently deciphered from a photograph of the Krishna deity playing chess with the Radha, the local king, the latter had an inclination for challenging his guests to play a round of chess. One day there appeared a wise traveler who accepted the challenge, modestly asking the king for a few grains of rice were he to win: one grain for the first square and later double the number of grains per square in each of the following matches, until the gaming table was filled. The king lost and ordered payment to the wise man according to the terms established and it was then that he noted the trap that had been set for him. What the wise man had requested as payment was none other than the exponential growth of rice grains that, after sixty four filled squares, represented 210 billion tons of rice. In other words, what half of humanity would consume for some centuries to come…

Large or small, state and municipal debts are the result of a structure that rewards the today at the cost of the future. Worse, it rewards the first local government that had the opportunity to put its entity in debt, in order to usually squander it in the most unproductive ways. Let’s take this by parts.

Credit serves for carrying out works that benefit the population. In theory, these works permit better lifestyles, attract investment, therefore jobs. Just as a businessman who requests a bank loan to expand his productive plant, the state government seeks to construct today an infrastructure project that will be of service in the future. However, in contrast with the company, whose credit would be paid off with the additional production generated by expanding the business, public works –if carried out well- involve very long maturation times and, in the majority of cases, do not generate direct revenue. That is, even though the project is well conceived, the credit afforded to a state or municipality depends on the income obtained by the entity through taxes or federal transfers that are not related with the public works themselves.

In recent years, the states have discovered new instruments for obtaining resources, all of these tied to future income deriving from these two sources. In this manner, countless states have committed these resources for the next three generations. That is, they obtained resources today that will be paid for with the product of taxes and transfers in the upcoming decades. The first state governor or municipal president who contracts the debt enjoys the benefit; all of the others and, of course, the locality’s inhabitants, suffer the consequences.

The first structural problem derives from the very fact of a governor even being able to shamelessly mortgage the future in such a way. Independently of how meritorious his projects are (and many of the latter, perhaps the majority, are not), the fact is that the future is compromised. The evident consequence of this situation is that all of the governors implicitly dream, suppose and expect that the federation will absorb their state’s debt; thus, with this, a new vicious circle begins. And that is the second structural problem: instead of constructing a healthy fiscal structure, everyone prefers to negotiate (or blackmail) the federal government rather than collecting taxes directly.

Credit, whoever the beneficiary, is granted depending on capacity to pay off of the potential debtor. This payment capacity is determined by the current income sources that whoever requests the credit possesses. As illustrated by the contrast between a company and the previously cited government, the problem of state governments in Mexico is that they do not collect taxes. That is the basic problem; the rest is just acting.

The discussion about state and municipal debts brings to the fore other much more transcending angles than the money itself. Although formally the country possesses a federal structure, that is, one that separates the attributions and responsibilities of each of the three levels of government, the objective reality is that, throughout the greater part of the past century, the federal government claimed unto itself all of the functions and left local-level political and administrative structures weak and undeveloped. Worse yet, it created a culture of petitioners among the governors and impeded the development of a system of checks and balances between local legislative powers and the respective executive power. With the decentralization of political power in the last decades, the governors acquired huge amounts of resources with no supervision whatsoever. The indebtedness was not the product of chance.

But the consequences of this reality can be observed, among others, in the violence characterizing a good part of the territory. During the era that the federal government controlled all political and police activity, security was in its charge. With the decentralization of power, the federal government no longer had the ability, power or resources to maintain security and, in general, the governors have not taken charge of constructing modern and effective police departments as well as functional judicial system. The security crisis did not occur because of the decentralization of power, but it did take place within this context: it came about simultaneously with the growth of the mafias of organized crime in the national territory. The result has been that the country does not have the mechanisms to deal with the phenomenon.

Debt and criminality are only two symptoms of the fundamental problem. Today’s federal structure is very good in theory, but is dysfunctional in the present reality. The problem goes back to the fiscal structure lying at the heart of federalism. In a word, states and municipalities must collect the taxes that will allow them to carry out and pay for the services (including, of course, the police and the judiciary) that their inhabitants require. Without a healthy fiscal structure that is sufficient for resources and expenditures at the local level, safety or prosperity will be impossible.

Instead of controlling the resources, the federal government should create a system of incentives for this change to occur, which would entail the greatest political revolution of our times.

www.cidac.org

@lrubiof

Luis Rubio

Everything changed but everything stays the same. That’s the sum of nearly two months of government. In less than a week, the new government installed itself and changed the political dynamic of the country: the professionals had returned and, with them, formality in politics. Forms are without doubt an essential part of a country’s political life but, without substance, forms do not suffice. Perhaps the greatest risk for the new government –and for the country- is that it perceives that its initial success, as enormous as it has been, leads it to conclude that it’s not necessary to do anything, that the problem was the incompetent actors of before and not the reality.

In a few weeks something unusual has take place: the sensation returned that there is a government. It has advanced towards restoring state rectorship and showcases efficiency. It didn’t take the new team more than a few minutes to displace the former, to wipe off the map –or from the media- themes that get in its way (such as criminality) and to make itself felt as a preeminent and omniscient presence.

Even with the difficulties it has encountered in the legislative arena, the old practices are back. Money flows like water. No vote is too expensive: everything and everyone may be bought. When money is no longer effective other instruments will come into use, less palatable. The media are finding out that the era of “license” is coming to an end. Now there is authority that is willing to employ its means and resources to reward and punish. Like before. Similarly, there are signs that another of the old vices is returning: self-censorship.

The existence of authority is an enormous asset if employed for carrying out relevant changes. Form is fundamental as long as it serves for something. The PRI of yesteryear constructed a modern country but afterward the party became stagnant, lost its compass and nearly destroyed the country. While that was happening, the forms continued to be impeccable: the same as the proverbial story of those who discussed the menu on the Titanic as it sank. The government has reestablished a sense of authority and possesses the capacities and skills to convert that enormous asset into a source of transformation. If it opts for watering down its reform proposal and lives off the assets that prior administrations constructed (which, with all of their limitations, were not few), in a couple of years, if not sooner, it will begin to see the limits of control without substance. Or it will end up running straight into a wall. By that time it will be too late to begin. The time is now.

The central matters are evident: public safety, economic growth and political stability. None of these is new and the three constitute basic challenges that are not resolved by the fact that there is a credible government in place, although without this it would be impossible to confront or resolve these.

Public safety is much more than fighting organized crime or, as many propose, ignoring it and allowing it its space, as long as it doesn’t get in the way. The country existed for centuries with weak judicial and police structures, all subordinate to the central power. Violence and crime were growing during the eras of weak central power (the XIX Century) and diminished with strong powers at the center, as occurred during the era of Porfirio Diaz at the end of that century and in the PRI era. This observation has led many to conclude that it is evident that what is required is the recentralization the power. The problem is that decentralization did not take place by will but rather through the evolution and growing complexity of the society and the globalization of the economy. While it is evident that a new political structure is required, the notion of centralizing would not work there either. The country urgently needs strong institutions that respond to the citizens and to resolve their problems.

Economic growth has been the objective and concern of all governments since the Porfirio Diaz era, but in recent decades –within a complex and highly competitive international context- it has been fleeting, when not slippery at best. Although there were moments and actions of great vision, such as the NAFTA, an integral strategy for transforming the country never developed. The contrast with Canada, which converted the same instrument into its ticket to development, is impacting. Of course the circumstances and characteristics of both nations are very distinct, but the main difference lies in the capacity, and above all, the willingness of the Canadians to define their objectives, construct strategies likely to reach these and to do everything necessary to achieve them.

Economic success will require a radical change of vision: to accept that the required transformation will entail costs but that once carried out, these become sources of investment, employment and wealth. In the past few decades, we have witnessed moments of vision but an environment of risk aversion: it is no coincidence that so little has been harvested. The results that we have seen are the product of the limitations of the objectives as well as of the strategies adopted. Even at the most visionary moments, enormous benefits were promised but the actions undertaken -like privatizations, deregulation and economic liberalization- were never themselves visionary or decisive. The easy way was always chosen, that of short term benefits and maintaining the status quo. If the government wants to be successful it will have to take the bull by the horns with a long-term perspective because everything succumbs when there’s an attempt to dodge the immediate costs.

The political stability that the country has experienced has been propped up by structures that gave out a long time ago. The “federal pact” doesn’t work and the best evidence of this can be noted in the inexistence of modern and functional police and judicial institutions at the state level, and in the way the public expenditure is exercised. The easy way out was also chosen in this ambit: leave things to take their course without authority or, as they now and once again phrase it, without rectorship. Our system of government is dysfunctional, weak and out of phase with the needs of public safety as well as those of a modern economy: there is not a sole check and balance. Without checks and balances, no country can be successful. Viewed from this perspective, it’s incredible that we are not worse off.

It’s been decades since the country has had an opportunity as enormous as the current one. A competent government and one capable of exercising authority is indispensable, but it is not sufficient: it if wants to transcend or, even, end in peace, the government had better begin utilizing its skills to transform the country. In its previous era, the PRI went astray because it allowed itself to be dominated by “de facto powers” that paralyzed the country. If it doesn’t get rid of them, they will snuff out the new government.

www.cidac.org
@lrubiof

Luis Rubio

Perhaps there is no greater evil, or one more despised by the Mexican society, than that of impunity. Impunity, the twin sister of corruption, is not the product of our culture or customs: it is the direct daughter of the way that Mexicans have chosen to organize themselves. The problem, as in other similar societies, is that one ends up believing that it’s something natural. In a recent article on Russia, Misha Friedman, a NYT photographer, affirmed that “corruption in Russia is so pervasive that the whole society accepts the unacceptable as normal, as the only way of survival, as the way that things ‘just are’”. Mexico is not so distinct.

And with good reason: observation of the daily panorama shows that impunity reigns above all. The examples are vast and very diverse. There’s a candidate who has run in four elections in his lifetime, but who has only accepted the results in one of these, the one he won. In the remaining three, he didn’t lose: the victory was stolen from him. We witness a farce between a communications enterprise and the government in which the only thing that’s clear is that nothing is transparent in the management of spectrum concessions and, worse yet, that all of those involved in the business (politician and media mega companies) appear to like the system. There are thousands of deaths, “disappeared” journalists, citizens who have been abducted but only a handful of judicial investigations. And all that seems normal to us.

Corruption is no more than a mechanism that allows the functioning of a society within a context of impunity. In the face of the impossibility of resolving the problems, the citizen adapts and corruption is a means of achieving this. That’s how daily problems like a traffic fine are solved, or a permit from the authorities or a visit from an inspector. The problem is not the corruption itself but the impunity that makes it possible and, from another angle, inevitable. And impunity is the product of our institutional weakness.

One of the myriad myths of the old political system is the supposed strength of the country’s institutions. Our image of institutions is that of great monuments and edifices or the way that politicians were disciplined before the presidential authority. However, the relevance of institutions resides in the rules of the game that they entail. An institution, noted Nobel Prize winner Douglas North, are the rules of the game in a society or, more formally, are the humanly devised constraints that shape human interaction. The more these rules are clear and defined, the greater the institutional strength and the lesser the potential for arbitrariness of the authority, thus the greater the impunity.

Echeverría’s foreign investment law was a monument to discretionary actions and a perfect example of the source of corruption in our country. The law established a set of precise rules on limits for foreign investment, national and foreigner shareholder rights, and differences among sectors of the economy. Although the law was highly restrictive, one of its articles conferred upon the authority full discretionary powers to act distinctly from what was disposed by the law in cases in which it considered it necessary. That is, the law established very rigid rules but subsequently a space of absolute impunity was generated. This same principle exists in all of our legislation and comprises what generates permanent uncertainty, in addition to spaces for impunity. When the authority possesses faculties so vast that it is legally immune to punishment, corruption becomes a natural survival mechanism.

Three examples illustrate the costs and the opportunities available towards the future. Some years ago I had the opportunity of attending an apparently normal process. A lawyer friend of mine accepted the case of some brothers who wanted him to help them separate the businesses that they had inherited. The legal and the business part followed its own dynamic, but what stood out for me was that the most complex and extensive part of the process was the way in which the clients would pay him for his services. Under normal conditions, the lawyer would have sent them an invoice for his work and they would pay. Period. However, the concern was that after arduous work involving multiple expenses, the clients would end not paying him, hence the need for a cumbersome arrangement that would guaranty payment. This was the extent of the distrust but, above all, the weakness of the institutions that we have. The difficulty of making someone comply with a contract generates absurd distortions.

This example contrasts with the way that building inspectors act in the US. For example, the rules regarding the number of spaces in a parking lot per foot of construction is clear and specific, not subject to negotiation. The inspector is invested with no faculties other than to establish whether this number of parking spaces exists. Because he does not have the faculty to modify (or “stretch”) the rules at will, his decision is binary: yes or no. It is not by chance that we Mexicans frequently clash with Americans in affairs of great transcendence: our frame of reference is radically different.

Fortunately there are examples that it is possible to diminish or eradicate corruption: when the spaces of arbitrariness and impunity are eliminated, corruption stops being possible or inevitable. That’s what happened at the end of the eighties at the then SECOFI (now the Ministry of the Economy) where a change in the rules modified the entire nature of this ministry devoted to commerce and industry. Historically one of the spaces of greatest governmental corruption, the SECOFI bureaucracy lived from the exploitation of their discretionary faculties in the awarding of investment, import, export, and other similar permits. With the liberalization of the economy (which, essentially, consisted of the substitution of permit requirements with tariffs or rigid rules), the entire industry of corruption at this ministry disappeared. Thousands of bureaucratic paper shufflers (or impeders of papers being shuffled) had no reason to exist and the ministry was reduced to less than 10% of what is had been. In that world corruption simply disappeared. It is noteworthy that many prefer the old system…

The day that Mexicans have clear rules in migratory affairs, electoral issues, radio and television concessions and property rights in general, as well as an authority disposed to and invested with the faculties to make them stick without looking back, the country will be another. The issue is to end the discretional faculties that render arbitrariness and impunity permanent: all the rest is mythology.

www.cidac.org
@lrubiof

JANUARY 2013

In the Lurch between Government and Chaos: Unconsolidated Democracy in Mexico

By  Luis Rubio

https://www.migrationpolicy.org/research/lurch-between-government-and-chaos-unconsolidated-democracy-mexico

According to an old saying, one is what one reads. Reading is one of my passions and occupations: through books, articles, and assays I learn from others, I reflect on what’s happening in the world and I shape my ideas and judgments. Some readings offer a profound and broad view, others are characterized more by a central idea. As the famous essay by Isaiah Berlin on hedgehogs and foxes, some authors observe the world from the vantage point of many experiences and perspectives (the foxes), while others concentrate on a great idea, the hedgehogs. For Berlin, Plato, Hegel and Nietzsche exemplify the latter, while Shakespeare, Aristotle and Pushkin illustrate the former. Something is learned from all, although some are more enjoyable than others.

This year I read novels, books on history, economics and even psychology. What follows is a series of brief comments on those that appeared to me to stand out more not only because of their excellence, but because they allowed me to learn new things or to reflect on ideas or perspectives that I saw the need to go over. There is no order, only ruminations.

Perhaps the most novel book for me this year was that of the recipient of the Nobel Prize for Economics, Daniel Kahneman, a psychologist who devoted himself to studying the way people make decisions. The book, Thinking Fast and Slow, encompasses an enormous spectrum of themes, but the heart of the argument is his theory on how the human mind thinks. For Kahneman there are two systems that drive the way of thinking: one is fast, intuitive and emotive, while the other is slower, the product of deliberation and more logical. Fast thinking offers enormous possibilities, but it is also the easy prey of prejudices and errors, in addition to its resting essentially on intuition more than on reflection. From this analysis, the author devotes himself to studying the impact of systems of thought on happiness, trust, the perception of risk and the way to come to a decision. Fascinating book.

Carlos Elizondo devotesWith or Without Money to the dilemmas of government spending. He explains with an extraordinary clear mind the dynamics of spending, with particular emphasis on two criteria; what is government spending good for, and whyit is not just a matter of raising more taxes. He dwells on the consequences of taxation, their impact on economic growth and the problem of a weak State that cannot even enforce the law. If you read only one book about Mexico or budgets and taxes this year, this should be it.

Six Months in 1945, by Michael Dobbs, is a wise and well told history of the last six months of the Second World War, a period that began with the meeting in Yalta of the “big three,” Roosevelt, Stalin and Churchill, when victory over the German Army seemed imminent. The avowed objective of these conversations was the construction of a lasting peace, but what really happened was that during those months the foundations were built of what would end up being the Cold War: the spheres of influence of the two super powers, the nuclear competition and the dividing of Europe. At the second summit of these three personages, in Potsdam, at the end of those six months, Churchill was already speaking about the “Iron Curtain.” What’s interesting about this book, a little like Barbara Tuchman’s famous work on the beginning of the First World War, The Guns of August, is observing how things can go in one or another direction and that a few things can make an enormous difference. In his most recent book, On China, Kissinger has a stupendous epilogue precisely about this: he writes of a brilliant document prepared at the British Foreign Office in 1907 on the evolution of Germany after its reunification in 1871. That analysis ended up forging the positions of the German as well as of the British side despite its being mere speculation: the consequences of the lack of communication, the example that Kissingeruses as a warning about the relation of the U.S. and China at present.

Unintended Consequences, a book by Edward Conard, defies the generalized concept on the cause of the current economic crisis. The author begins by posing some simple questions but ones with enormous depth: “Ifthe U.S had become a nation of reckless wasteful consumers rather than investors, why did productivity soar in the years leading up to the meltdown?If predatory bankers took advantage of home owners, why did down payments decline, thereby shifting risk from home owners to lenders? If the risks were easy to spot, why did top political and financial advisers encourage lenders to make unsound investments? This is a book that plays devil’s advocate to conventional analysis, that does not skirt complex matters and that presents a sensible framework of economic recovery that won’t be much to the liking of those who prefer the government to resolve all of the problems.

In Left Behind: Latin America and the False Promise of Populism,the Chilean economist Sebastián Edwards offers a refreshing view of the avatars of the region’s economic policy. Eras of disproportionate hope, followed by periods of disillusionment, all due to the historical nature of the dominant economic policies, which favored regulation, corruption and manipulation over competition, markets and the rule of law. His main argument is that there is no way to cut corners to on the way to development: if a country wants to achieve it, it must adopt a strategy that makes it possible. In his analysis, which is concentrated above all on Chile, Mexico and Argentina, Edwards explains with devastating logic the reason for which populist policies, attractive as they seem on the surface, will never end the poverty that characterizes the region.

In closing, Karen Elliott House has just published a book that took decades to research. On Saudi Arabia is a journalistic marvel that permits one to insert oneself into the Saudi clans and families –from the Royal Family to the commoner population- and to have a glimpse into a complex and distinct world that is experiencing the death rattles of regional revolutions, a generational transition and a key industry, all this in the midst of a religious fervor that does not augur obvious success.

Happy New Year to all!

www.cidac.org

@lrubiof

The avatars of the bill on labor matters are suggestive of everything in which Mexico has advanced but also of the enormous distance it has yet to cover. The very idea of a preferential bill indicates that there is awareness of the need to adapt existing institutions, procedures and mechanics to times distant from those of exacerbated presidential power. But the way that the “preferential” procedure was likewise constituted patently demonstrates the insufficiencies that persist or the disinclination to take a leap toward a society with real developmental potential.

The specific issue of the preferential bill is that it lacks teeth. In France, where the procedure was conceived, when the president sends upan bill under this heading the legislative power has a peremptory period during which it can act but, if it doesn’t, the bill is automatically approved. This confers on the president an instrument for forcing the legislature to respond to his proposals, avoiding key issues going into deep-freeze, thus advancing the development of the country. In Mexico the idea was adopted but not the mechanism: peremptory time periods are established but nothing happens if the legislative power fails to vote or becomes paralyzed, as occurred. That is, there is no guillotine, the name commonly used for the procedure in France. Also, à la mexicaine, the problems that inevitably would present themselves in a bicameral system were not resolved. It advanced but didn’t reach the finish line.

A few hours prior to writing this text I had the opportunity of watching a documentary on the 1982 expropriation of commercial banks in Mexico. Beyond the topic of the documentary, what was extraordinary is the contrast between a Mexico that has disappeared and the one that exists today. Amazing the manner that the functionaries and governors, the politicians and, in general the society, conduct themselves. Despite the shortages and insufficiencies, such as that illustrated by the preferential initiative, there is no doubt that the country has advanced dramatically.

What hasn’t changed is the notionthat everything can be controlled from above, that the concentration of power is good and that any limitation of this constitutes an affront to the country’s development. Judging by the performance of the country in recent years this would be considered, at least in some measure, absolutely logical. For many, the problem is the weakness of the presidency, a concept that is somewhat strange given the history: it’s not as if the country developed by holding itself up as example to the world during the years of the PRI’s authoritarian rule that then, suddenly, under different management, everything collapsed.

The equation at which Mexico must arrive is very simple: it requires State capacity –the possibility of deciding, acting, foreseeing and resolving problems- and it requires institutional counterweights. The former won’t work if the latter don’t exist and vice versa: the capacity of the State is crucial for development but for this to come about checks and balances are required in the society so that it favors decision-making without excesses or abuses. Today we have two good examples of how pernicious a misunderstanding of these fundamental balances can be: we have  the amparo, sort of habeas corpus, that is so broad that it ends up paralyzing governmental action and a preferential initiative without teeth or transcendence.

Our situation is not exceptional; there are dozens of nations that have attempted democratic transitions with neither plan nor compass and that, like Mexico, have ended up stuck at the middle of the river. Given an effective, capable and convincing leadership it is feasible to build the institutional scaffolding required, above all because there are many examples of success stories in the world.  For that Mexicans would have to do away with the propensity, if not a collective decision, to imitate the poor examples.

There are many sources of counterweights in the country, but there is no balance among the branches of government, which is what comprises the concept of checks and balances. The de facto or vetopowers, the amparo,the unions and other power factors constitute formidable counterweights for the functioning of the political system. So formidable are these that they have ended up by paralyzing it. What is lacking is thecounterweight that the other component of the binomial represents. For example, it is clear that the original intent of the preferential initiative was that of imitating the French case. With this logic a counterweight was supposed to have been created for the legislatives arena; however, at the last minute, during the approval process of this law, the key factor was removed: the so-called afirmativaficta (automatic approval). The problem is that one thing does not work without the other. We ran only to remain in place, but now saddled with enormous potential frustrations.

In the absence of the “checks and balances” binomial, many of the instruments, motives and mechanisms of the old authoritarian system persist,making it impossible for the government being able to be functional and effective. One party having the legislative majority does not guarantee, as illustrated by seventy years of PRI rule in the 20th century, that they will make good decisions or that the country will prosper. I have no doubt that a government more dexterous in political operation will make it possible to dodge the pitfalls that were impossible for recent administrations to resolve. However, in addition to the capacity of political operation solid and functional institutions are required that permit governing in a normal manner.

In an article entitled “Fragile Constitutions”, W.H. Hutt affirmed that “the essence of an effective constitution is that it is built on distrust, not on faith”. In Mexico we tend to do exactly the opposite: we shore up everything on the faith that everyone will behave according to a preconceived plan, a reasonable concept in the era of hard presidentialism, but incompatible with the size and diversity of the Mexican society of today. Thus the most important task of the government, but above all of the entire country, resides in the construction of an effective system of checks and balances.

The back and forth of Mexican politics will not disappear until there is a system in which everyone loses when they don’t do their job, that is, when none of the political actors can elude their responsibility without their fault being evident and costly. The lack of a system of balances rewards conflict, fosters paralysis and is a permanent source of intrigue and distrust. As long as we continue to live in an environment that rewards the one in which, because of the absence of balances, some systematically boast of defeating others, newspaper columns will be filled to overflowing,but Mexican democracy, and the development of the country, will continue to be paralyzed.

www.cidac.org

@lrubiof

What comes first, adequate laws for a society to function or a citizenry that complies with them? The question is not an idle one.Successful countries have one thing in common:  the fact that there are clear rules of the game -also known as laws and regulations- for all social, economic, and political actors. In some of these nations, the rules are authoritarian, in others liberal, but there indeed are rules and compliance with them is exacted: in this it doesn’t matter whether it’s China or England.

Part of the PRIist legacy in Mexico is low regard for any rule, and even more so when it is not enforced with maximum prejudice―and a cadre of officials happy not to enforce them, for a price. Perhaps this was the logic implicit in Cantinflas’s question on sitting down to engage in a game of dominoes: “Are we going to play like gentlemen or like what we are?”

What’s not evident is whether Mexicans’ disdain for rules derives from the characteristics of the rules themselves, from the nearly congenital scorn that we citizens appear to have for them (in other words, because of the culture), or because of the way the government acts. The issue is not new, as the famous phrase from the Colonial era –I obey but I do not comply- shows this to be an ancestral legacy. However, given the crucial importance that rules possess for development, it is imperative to elucidate the nature of the phenomenon.

In the Mexican capital’s Polanco neighborhood, the issue of the parking garages has been debated for decades. Thanks to the 1985 earthquake, the formerly residential neighborhood suddenly became a commercial zone. Instead of houses, it filled up in a very few years with multifamily dwellings, office buildings and commercial activity of all sorts. However much the residents’ organizations fought, the borough’s authorities increasingly licensed stores, restaurants, hotels, and businesses of all types. Very few of these budgeted for the required number of parking spaces. As far back as I can remember, the magical solution in each discussion was: make a big underground parking garage under the park. The idea is logical and makes all the sense in the world and even more so because each government head at the time made offers to build it and not to authorize more buildings or businesses. Despite this, the opposition of the neighborhood’s inhabitants has been systematic, as if they were a pack of intolerant reactionaries. The rationale of those who live there is very simple and is in radical contrast with that of someone who “visits” the place every three years, like the delegates (the local authority) do: for the neighborhood’s residents, the delegate’s word is gone with the wind because there has not been a single one who did not authorize more and more commercial activity: no agreement was worth more than the paper it was written on. Had the underground parking garage been constructed, the residents say, there would have been justification for new building permits. In one word: there are no trustworthy rules that confer certainty on the citizenry and no one believes those in authority.

Some time ago I met a man big real estate developer who decided to expand in to the US and build a mall there. He purchased the land, contracted an architect, obtained the respective permits, and put up the mall in record time. Accustomed to operating a similar concern in Mexico, his comments were always on how efficient everything had been, on the how clear the rules were and, above all, that the greater part of the paperwork was done by postal mail: no time was lost and there were no bribes. A couple of years later, one of his tenants proposed duplicating his business space, for which an architect was called in who designed the respective project. As soon as the plans were done, they were sent to the city government for approval. A week later they received a rejection notice because the plans did not comply with the rule corresponding to the number of parking spaces per square foot of construction. The businessman raced over to this office and found himself stopped in his tracks. The entrepreneur’s rejoinder to the rejection was, “But only two spaces of the total one hundred plus spaces are lacking”. The response was equally clear: if you comply with the rule the project will be authorized, if not it will be rejected. Period.

When the electoral reform was debated at the beginning of the nineties, my friend Federico Reyes-Heroles undertook a study of the diverse modalities of existing legislation and relevant institutions. As part of this, he visited the office of the electoral authority in Germany. It turned out that it was hard for him to come by an appointment and, when this was granted, he understood why: it was an administrative office that never received visitors nor did its personnel understand the need for explaining what for them was obvious: legislation exists and we do nothing other than implement it. There wasn’t even a room to receive visitors. The rules are clear and do not require complex procedures, a permanent supervising council (such as the  Federal Electoral Institute, the Mexican IFE) nor additional discussion.

The three examples portray circumstances that explain the importance of having clear rules in place that confer certainty on the citizenry, on the investor, on businesses, on the political parties, and on the country in general. After observing Brazil for some time, I can conclude that the main reason for its relative success in recent years has not so much to do with great reforms but rather with the continuity of its government that, despite the contrasting personalities of its last two presidents, Cardoso and Lula, was almost perfect. That is to say, 16 years of certainty. Clarity and certainty make miracles.

What makes a country work is the certainty of its processes. March and Olsen, two specialists, say that what makes institutions work is the routine way in which people do what they’re “supposed to do”. Simple stimuli trigger complex, standardized patterns of action without extensive analysis, problem solving, or the use of discretionary power. That is, it’s about procedures that are defined up front, known by all, and designed to give rise to clarity and certainty. When discretional powers are invoked, certainty disappears because a bureaucrat can change the rules at any time. It is in this regard that, says Oscar Arias, Costa Rica’s ex-president, “to respect democratic institutionality means much more than voting every four, five, or six years. It means understanding that there are rules of the game that do not admit exceptions”.

Back to the beginning of this piece, what comes first? Maybe our problem is that we have for centuries depended on changing authorities who possess excessive powers and who are thus incapable of conferring certainty on the citizenry. Here, as in so many other ambits, the problem is that there has not been regime change: we continue living under the scheme of centralism while everything has decentralized. Centralism died because it was inoperative. Now we must build institutions that match the reality.

www.cidac.org

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

The great absence in Mexican politics is an agreement on the how. Despite this, everyone is focused on the what.  After years of polarization, the Pact signed last week entertains enormous political symbolism and I do not wish to minimize its relevance. But the central disconnect of Mexican politics lies in the how because this lack impedes conducting public affairs in a healthy manner, level-headed and for the benefit of development and the citizenry. By necessity, a pact on the what ends up being general and abstract and this is inevitable because it is not possible, nor logical or desirable, to strive for a detailed agreement on objectives.

The presidential election of some months ago decided who would govern the country and with which program. The project presented by the winning candidate is distinct from those of the other parties and this is the one that will presumably serve as a base for the new administration. There is no reason for entering into  a dispute with respect to the fact that the objectives that the Peña-Nieto government will pursue would be distinct from those that other parties would prefer: that’s what the voters decided. The other parties or many of us Mexicans may or may not like what it proposes, but the rule of the game –the vote in the elections- decided on the program to follow. That is, the procedure for choosing was the electoral one; once the voters made their decision, what follows is to comply with the result and to reach consensus on the objectives as far as the environment permits and the need for legislation requires.

In a democracy, procedures constitute the key to pacific co-existence. Procedures serve to choose who will govern, who will serve as a counterweight in Congress and how the government will be scrutinized to prevent it from abusing. The rules of the game that make up the political system are the key to the functioning of the country and that is where we are stuck. That is where we must train our focus.

Common objectives are inevitably abstract. Thus, it’s indispensable to agree on procedures. To begin with, there is no agreement regarding things as elemental as that the elections decide on who will govern us or on the way that the government will be supervised in its functions. In a mature democracy, the actors -parties, public servants, politicians, legislators- accept the procedures as sacrosanct and devote themselves to competing for their objectives and programs in the electoral terrain. Once the latter have gone by, each person attaches himself to the function that corresponds to him: some in government, other as counterweight. In today’s Mexico, everybody wants to govern and the government doesn’t want to be kept tabs on. This way it’s impossible to advance.

To resolve these conundrums, the Moncloa Pacts are frequently invoked as the model to follow. The approach is somewhat puzzling because characteristics are attributed to it that were not the relevant ones in the Spanish case.

The Moncloa Pacts were not an agreement on “the what”. The issue on the agenda at the time had to do with prices and salaries, crucial matters but of lesser political transcendence. The transcendence of that meeting in particular was concerned precisely with what we in Mexico have not achieved: agreements on procedure.

At the time, within a complex context after the death of the dictator, Adolfo Suárez was facing severe economic problems. In addition, although Franco had left in place a structure of the succession of his preference, Spain was experiencing tremendous effervescence and political expectation. The rest of Europe was moving towards unification and Spain was languishing. In theory, Adolfo Suárez could have attempted to navigate through the economic moment and get ahead with the instruments he had at hand. However, his genius and political grandeur resided in the fact that he opted for calling together all of the political forces to unify the country and to establish agreements about procedures that would serve to lead the future of his nation.

Beyond the specific issues that were agreed upon that day in 1977 (many related to the economy), the two transcending issues were, first, the fact that all of the relevant economic and political forces were present: from the extreme left to the extreme right, the business community and the unions. After decades of exclusion, the presence of all of these forces, beginning with iconic figures recently returned from exile such as Dolores IbárruriLa Pasionariaand Santiago Carrillo, changed the national context. Presence spoke for itself.

Second, if Suárez had attempted to impose his world view, the entire scaffolding that led to that meeting would have collapsed. Suárez proposed the adoption of an array of specific topics pertinent to the Spanish moment (and that were approved by the Parliament immediately after). But the key to the Moncloa Pacts was the implicit acceptance of Franquist legality until a new constitution were written and adopted. That is, the procedure was agreed upon by which the Spain heir ofFranquismwould transit on to full democracy. No one agreed on the contents of the new constitution or on the way the State enterprises would be managed or how concessions would be granted to television networks. The decision on these affairs would pertain to a future government. The agreements were on how they would be decided and not on what would be decided. That was the key to the Pact’s success.

The “Pact for Mexico” brought together the main political forces and therein lies its enormous political significance. Personally, I coincide with the content and recognize its transcendence. However, the fact that, to achieve consensus, details had to be eliminated that were found in the initial proposal speaks for itself. The latter was inevitable because it is logical that not all parties and their factions would be willing to subscribe to it. The reason is two-fold: on the one hand, it is natural and legitimate for substantive differences to exist among parties and politicians with respect to public policies and reforms. It is absurd to expect anything else. On the other hand, in the absence of a consensus regarding procedure (the essence of the Moncloa Pacts), it is inevitable that any excuse would serve astrigger for a fight and for differences that have nothing to do with the immediate matter to surface.

We Mexicans elected the government that today is in charge and, as it is already doing, now it is its responsibility to negotiate its priorities with the diverse political forces. The whole will decide what can advance and in what terms. My impression is that its success –and its legacy as political and social profitability- will be much greater and lasting if an agreement on procedures is reached than if it sets its sights on an elusive unanimity of objectives.

www.cidac.org

@lrubiof

In Arthur Koestler’s novel Darkness at Noon, Ivanov, thefaithful and long-sufferingbureaucrat, interrogatesRubachov, anoldrevolutionary leader, arrested for doubting the course his country had taken after the end of the Revolution. Emboldened, Rubashovassails Ivanov with a categorical phrase: “we made history, you only play politics”. The revolutionaries had fought to change history and now, in thevoice of Rubashov, theyregrettedthe abandonment of the people. ForRubashov, theironhand of “Number One” was only devoted to preserving power.

What to do? The perennial dilemma of he/she who governs.

New government, new reality? Clearly no. The intractable reality continues to be present and the problems do not change because a change in government has taken place. One of the lessons that time teaches is that reality is more obstinate than the will of a new government official. A new government can change the forms, the style, the projects, and its desires, but the context –the reality- remains.

At the same time, a new government always has the opportunity of making its own mark on national politics, exercising effective leadership, thus compelling a change of attitude and, eventually, of reality. Any observation of the performance of the country with regard to the rest of the world in the last two decades reveals that it has been our pessimistic and defeatist attitude that has frozen the advance to a much greater extent than the lack of action on the part of the government. Equally critical is that the government action be proficient.

To exemplify, it seems clear that the only pertinent difference between Brazil and Mexico over the past two decades has been the quality of their leadership. In terms of reforms, each of the two countries advanced in distinct ways: Mexico is ahead in some issues, behind in others, but on the substantive Mexico is very much ahead: there are central issues of economic viability, to cite the most relevant, in which we have advanced much more. Where they left Mexico in the dust is in the quality of their leadership, which was expressed in two forms: first, in the continuity of public policy despite the change of persons and parties in the government. And, second, in the existence of convincing leadership that made it possible for Brazil to envision the future with an optimism that is alien to Mexicans. Enlightened leadership, which is not the same as hubristic (we’ve had an excess of those), makes an enormous difference.

An intelligent change in domestic policies can do wonders, but it does not alter the context within which the country will be required to function and that context is not particularly benign at present. The U.S. economy begins to get back on its feet, but not at a fast enough rate for it to become a transformative factor. The European economy remains in trouble and lacks much to become an engine for growth. South America begins to experience the avatars of the Asian boom and reverts to its old ways: sealing itself in and, like an ostrich, burying its head in the sand. When the growth engine lies outside of a country’s control and difficulties strike, as happened to Argentina and to Brazil in these years, the internal limitations are magnified and what before were advantages become, of a sudden, dead weights.

Given the context, what can Mexico do? The easy way, the South American way, would be to close ourselves in and pretend that everything will be resolved without doing anything. Many business people would be pleased for the government to act as the Brazilians have in the automotive case or the Argentines have in that of oil. The problem is that the status quo is neither amiable nor attractive. The country must move forward and break with the impediments –the real ones and the self-imposed ones- which have kept us nearly paralyzed for so long.

The great issue for going forward will have to be that of linking the internal with the export economy. That is, to radically raise the national content of exports, as Korea did from the sixties on and that permitted it to accelerate the pace of its development in prodigious fashion. The rift between these two parts of Mexican economy -the product of the protectionism that has prevailed despite the economy being supposedly open- has done nothing other than impoverish the national industry and limit the growth of employment and of the incomes of those who are employed. It is urgent to create an industry of suppliers –with domestic and foreign companies- to modernize and transform the national industry, to wrest it out of its paralysis and to provide it with a horizon of growth and development that has been missing for too long a time.

One way to accelerate that process would be to promote the convergence of interests among the three North American nations. The sum and variety capacities, resources, comparative advantages and skills that exists in the region would allow the region to achieve high levels of competitiveness before Asia and Europe that none of the three nations would be able to achieve by itself. If the Americans do not catch sight of the opportunity, Mexico should create it and convince them. The potential of regional economic development –Mexico’s main growth engine- is infinitely superior on joining forces than being merely exporters to our two neighbors.

To date, the export sector –that pays better salaries and sustains the rest of the economy- only employs something like 20% of the industrial labor force. The remaining 80% is dependent on an old industry, decrepit and not competitive. Inevitably, the salaries it produces are much lower and less reliable. The essential question is whether the country should place bets on the former or the latter. The South Americans have clearly opted for the latter. In consequence, what they become is as promising as what was Mexico’s dire outlook back in 1982. It’s time to think big, to look ahead, and to take the steps that the reality calls for.

A new government always has the opportunity to change the tone, open spaces, and summon the society to march together in a new direction. That is what turns a president into a leader. But the time for achieving this is not infinite.

In his Political Testament, written in 1640, Cardinal Richelieu maintained that the problems of the State are of two kinds: easy, or insoluble. They are easy when they have been anticipated. When they blow up in your face, they are already insoluble. Time is of essence to avoid the key challenges from becoming insoluble. The problem is that the country has been postponing the big questions of economic development in good measure not to affect interests dear to the PRI. The true challenge of the new administration will be to prove that it has the will and the ability that its predecessors of the previous seventy years did not.

www.cidac.org

@lrubiof

In politics they say that “perception is reality”, which is not very distinct from the assertion of one of Mexico’s political sages, JesúsReyes-Heroles in the sense that in politics, “form is content”. Within this context, what happens when the reality changes but perceptions remain immobile? It is possible that we are in the midst an enormous paradigm shift in the migration issue but that the perceptions, in the U.S. as well as in Mexico, are not adjusting.

Each person has his or her way of seeing the world, the manner of understanding why “things are the way they are”.   Perceptions are constructed from learning, knowledge and experiences, but this frequently has the effect of impeding us from observing when a change occurs. It is to this type of disquisition that a philosopher at the beginning of the sixties responded with a book that transformed the way of comprehending the changes in the world. In The Structure of Scientific Revolutions, Thomas Kuhn developed the concept of the “paradigm shift”, whose central argument is that scientific advancement is not evolutionary but rather the product of “a series of peaceful interludes punctuated by intellectually violent revolutions”and that in these revolutions, “one conceptual world view is replaced by another”. Something like this could be taking place at present in the world of Mexican migration to the U.S., but no one in that so very charged political environment appears to be taking note of it.

The migratory matter cuts passions loose. On the one hand, migration is the product of the demand: in the absence of a social safety net to help them, the migrants go for “the sure thing” or something as sure as possible. Typically, they find out about an available job from a relative or friend and this leads them to set out on the arduous via crucis through inhospitable terrain and mafias dedicated to human trafficking, in addition to the risk of being detained by “lamigra,” the border patrol. Without the reasonable certainty of getting a job, none of these would make the decision of abandoning their family and homeland. It also explains why, in normal times, unemployment among migrants is virtually zero.

From the perspective of the Americans, who see the growth of enormous settlements of strange people and who overcrowd their cities, illegal migrants look very different. Many of these Americans see hundreds of thousands of migrants cross the border and later make their waythrough their properties, particularly in Arizona, and they have organized and adopted extreme measures that include militias armed and ready to kill migrants. But what’s relevant is that passions run high and have created a political dynamic that impedes serious discussion in the U.S. on how to approach the phenomenon.

The migratory theme has two sides: that of those who are already there (the “stock”) and that of those who respond to new opportunities (created by the companies’ demand for hand labor) to migrate (the “flow”). The immigrants who are already there live in a world of legal uncertainty and, as legal spaces close down, they encounter basic problems with respect to their children’s education, access to health services and the possibility of obtaining a driver’s license. The world of illegality is tough in a society that values the rule of law and that doesn’t know what to do with a population that is not legally recognized. Many want to resolve the issue of those who already live there but they don’t want this solution to become an incentive for new claimants, as occurred with theSimpson-Rodinolaw in the eighties.

From the Mexican political perspective, there have been three facets that are revealing of the complexity involved. Fox bet his presidency on a decision over which he had no influence at all: as much as Bush was willing to push an immigration bill through, this never materialized. Calderón opted for “de-migrating” the bilateral agenda, disowning the theme. No one saw to the real problem that no politician can ignore. Suffice to say, it is impossible for many governors to turn a blind eye to the fact that more than 50% of their states’ adult populations, as happens in Zacatecas, Michoacán, and Guanajuato, (and 10% of the entire population of the country), is found in another nation. No politician can ignore such numbers.

The U.S. presidential election of this past November, in which an overwhelming majority of Hispanics and Asians voted for Obama, has created a novel political situation that, many believe, will lead to serious discussion concerning the immigration policy of that country. The debates that have taken place to date are not limited to the issue of illegal migratory flows, but rather many are centered on things like visas for engineers, the permanence of foreign graduate students in the U.S. and a revision (perhaps rejection) of a historical policy of reuniting families. In all of this debate, the Mexicans are the bad guys of the film.

What is paradoxical, but politically inescapable, is that the potential revision of U.S. immigration policy comes at a time when Mexican migratory flows are negative, that is, when there are more returning than embarking upon the way North. The economic crisis diminished job opportunities drastically, above all in the construction industry, which in turn has reduced the flows. However, the more fundamental issue is that the Mexican demographic curve is changing rapidly, and that implies that the number of potential immigrants is also decreasing. This is a paradigm shift that has not yet penetrated the political discussion.

Those considering the possibility of migrating do a simple calculation: the job availability where they find themselves, the difference in salaries between the two countries and the costs of undertaking the trip. This calculation was highly favorable toward emigration in the nineties due to the fast growth of the U.S. economy, Mexico’s inability to generate high growth levels and the enormous increaseof the population during the two previous decades.

My impression is that these premises could be shattering themselves into smithereens: first, it is highly probable that the new government will achieve creating conditions for fast economic growth in Mexico. Second, it appears improbable that the U.S. economy will procure an accelerated recovery. Finally, this “excess” of Mexicans is disappearing because for years now the birth rate has not been perceptibly greater than the replacement level. That is, we are possibly facing the end of the great migratory flows.

The problem at present is one of perceptions. It is necessary to solve the illegality problem of the co-nationals living there and the new reality makes this infinitely simpler, provided that everyone understands that, with regard to future migrants, very few will be Mexicans.  Changing perceptions is a political imperative.

www.cidac.org

@lrubiof