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

At 102 years of the Mexican Revolution, the PRI is getting ready to return to the presidency. The circumstances of the country of today and its daily reality are nothing like the times at which Madero called for the uprising against PorfirioDíaz, but the moment is equally transcendental. Not only is a president coming from the PRI returning, but also it will be the first occasion in decades on which the politicians return to power. The hope is that those who return have learned a lesson from their former fellow partisans who left defeated, first due to their performance and then at the ballot box.

The citizenry is anxious for a change and fearful of its implications; many Mexicans believe that fraud was involved in the elections and some exhibited a worrisome propensity to reject institutional channels to resolve disputes and, even, a willingness to adopt violent ways to get what they wanted. Despite the stability enjoyed at present by the country and the relatively benign economic situation (above all compared with other latitudes), the inescapable fact is that dissatisfaction is ubiquitous and generalized.

Faced with this panorama, the government that will initiate its six-year term in office in a few days evidently has been pondering its priorities and options. The various members of its team have been poring over options, proposing alternatives –some in public, whether indirectly or not- and competing for the ear of the incoming president. Different from the amateur governments of recent times, control of the scenario is notorious: despite insistence for the upcoming president to show his hand (in the legislative agenda, the cabinet, programs and priorities), the discipline speaks for itself. No politician puts his cards on the table or opens spaces until he finds himself in place and in control and until he possesses the possibility of administrating the processes.

What no president in the making can elude is the reality that confronts him and the complexity that this entails. On a certain occasion Kissinger affirmed that “competing pressures tempt one to believe that an issue deferred is an issue avoided: more often it is a crisis invited.” The diversity of problems and themes that require attention increases the complexity and endorses a milieu, so eloquently described by a U.S. diplomat. At the same time, we must remember that it was precisely during this same weekend in 1994 that fundamental problems were discussed and lack of decisions in this respect led to the worst economic crisis that the country had experienced since the Revolution.

The great success of the old PRI system resided in its capacity to put problems off. After pacifying the country, the PRIists, who doubtlessly for many years maintained a tight closeness with the population in all strata and provided extraordinary social mobility, became comfortable and devoted themselves to avoiding problems, to postponing these and to administering the conflict. In some instances they did not achieve this, but at some moments their mantra ended up being, in the words of a certain personage of the times, “better not move it”. The PRI of the past was entirely devoted to power: the ideology was the instrument, not its raison d’être. On its part, development was a relevant objective, but only when it did not alter the established order or the interests of the beneficiaries of the “PaxPRIista.”

The technocrats who came into power in the eighties introduced order and discipline into the governmental function, as well as a forceful sense of purpose and a logic of future. Clear minded that it had become impossible to maintain power without development and systematic economic growth, they initiated reforms that had the immediate effect of providing oxygen to the economy, but clearly not a lasting solution. The contrast with the Chinese Communist Party is palpable: although the latter’s purpose is exactly the same as that of yesteryear’s PRI, preserving power at any price, their action reveals the understanding that this is only possible to the extent that the party as well as the country achieves a permanent transformation, because without this it is impossible to satisfy the needs of the entire population.

Today’s reality demands regeneration of the PRI itself as well as of governmental activity. What the reforms of the most recent decades achieved is the existence of a hypermodern and competitive productive plant, limited solely by a dreadful quality of government. Worse yet, as ironized by Indians with respect to their country, it frequently appears that the economy functions at night while the bureaucrats are asleep. A country with a sense of future requires an environment that favors progress and prosperity. Except for the most daring or those with the greatest advantages at the outset this is not certain at present for the overwhelming majority of Mexicans.

Although the clamor with respect to the government not yet inaugurated that it put its cards on the table is unjust, what this urgency reveals is an acute uncertainty of what is to come and concern because the priorities that the government-elect decides to drive translate into perceptible improvement in a very near future. Instead of pacifying the fault-finders, initiatives in matters of transparency, corruption and accountability(independently of their importance) have had the effect of generating skepticism concerning the clarity of the complexity of the moment that characterizes the team getting ready to govern.

Clearly, the country requires a drastic rise in its economic growth rates and this is only possible within an environment of fiscal security, regulation that fosters investment and political and economic stability. Everything that contributes to achieving these conditions should be accelerated; everything against these should be annulled.

It took many decades to recover financial stability and the fact that a candidate emerging from the party that caused all of those crises has returned to power demonstrates how much the national reality has changed. The party that promised to center the government on the citizenry and that did not comply lost. Now the PRI, which promised an effective government, possesses the unusual opportunity of achieving a reform agenda that got the country out of the hole three decades ago but that was never consolidated.

The difference between success and failure is enormous in results, but is very small –on occasion unperceivable- at the moment of making decisions on priorities, changing ministries and appointing functionaries. It behooves us for the president-elect to have the wisdom to know the difference.

www.cidac.org

@lrubiof

According to a long-standing idea, the problem of Mexico resides in that the laws are not complied with and that if only compliance with them were exacted, everything would work well. Behind this perception lies the notion that we have good laws but a poor system of governing. Others think that the problem resides elsewhere: something akin to the world of Luigi Pirandello, whose wife suffered from schizophrenia, and the playwright produced works that attempted to conciliate multiple degrees of reality. That is, that there are so many rules, so complicated, so discretional and so contradictory among the distinct levels of government that it is impossible to comply with the laws or that compliance be exacted for these. Whatever it might be, the population ends up adapting, surviving in the best manner possible. I ask myself whether there might be a better way of resolving our differences, thus of governing the country.

Part of the problem is the underlying conflict. Another part is the complexity that we impose upon ourselves. An essential source of the conflict of recent decades resides in this disconnect that Roger Bartra describes with precision: “Not all the people (in today’s Mexico) live in the same “now”, thus not all imagine the same future…. One of the fundamental aspects of democratic politics lies in…. the custom of contemporizing, in the sense of knowing how to live in the same epoch…in the same time…thus adapting oneself, making concessions and forging agreements”. If all Mexicans do not even live in the same time, how is it possible to establish rules likely to arouse compliance and that those who govern exact compliance with?

In other words, we have an elemental problem of political disagreement about which corrective or rectifiable attempts have been made by the adoption of an infinity of rules, laws, and levels of authority that have done nothing other than complicate everything and impede the functioning of every-day productive life. Worse, all of this has taken place within the context of a dysfunctional governmental system in which the federal structure clashes with the concentration of power and the incentives of those who govern (making themselves rich and remaining the power) with the needs of development. A better system of government is required but this is not attainable only by wanting it.

The problem is not a matter of abstraction. Daily life, for the population as well as for the world of the government, offers innumerable instances that depict frequently irresolvable dilemmas. Some governors, as recently illustrated in Michoacán, have tried the strict road of legality, only to find that applying it is not so simple and that the risks of doing so are enormous, to the extent that the precarious social and political stability can be lost in no time. Others have opted for not exacerbating the tensions, abdicating their essential responsibility of governing, as occurs with the demonstrations, marches and the taking of buildings in Mexico City, where doing nothing ‒or even protecting the protesters from the affected population – turns out to be less costly politically than exacting compliance with the law.

Corruption is the other side of the same coin. Corruption is consequence, symptom and solution, all at once, depending on the place of the “value chain” of power in which one finds oneself. For the ordinary citizen corruption is a solution to the excessive discretional power of the authority: a bribe –small or large, depending on the case- that permits one to get an inspector, a traffic officer or a bureaucrat, whose powers are vast, off one’s back is in the end a functional solution. Corruption is symptomatic of a rancid political system characterized by the existence of so many laws and rules that confer such broad powers on the authority that the potential for abuse is immense and permanent. Corruption is not resolved by greater supervision nor with a greater number of prosecutors of any stripe, because the problem is one of an excess of authority: what is urgent is to wrest discretionary faculties from the authorities and their employees in order for these not to have the possibility of abuse in their diverse ambits of competency, while simultaneously strengthening the institutions charged with order and justice.

Faced with the complexity of governing a country as complex, diverse and dispersed as Mexico, the natural inclination is, and has been historically, one of centralizing the power and increasing the faculties of the authority. The solution, as Luis de la Calle proposed in a recent conference*, lies exactly contrariwise: in opening competition, eliminating the protected spaces and changing the incentives that today favor the illegality, violence and antisocial behaviors. Although it might seem surprising, it is only with adequate incentives that Mexico will have a strong state that propitiates respect for the rights of others.

Corruption and abuse exist because there are spaces that generate what the economists call “rents”, that is, exaggerated profits that are the products of circumstances that confer exceptional advantages on certain players. These advantages can derive from the regulatory framework (when, for example, excessive faculties are granted to an inspector, which he employs for extortion; or a company, when control is awarded concerning a resource or a sector of the economy, facilitating consumer abuse) or the control of nodal points for the functioning of a determined activity(such as certain highway intersections or points of access to the U.S. in the case of drugs). In both instances, it is the fact thatsomeone has too much control, or enormous faculties that permit deciding who lives and who dies, which in turn determines the existence of illegality, conflict and violence.

The proposal is very simple: control of processes and decisions generates profits for a few and this, in turn, creates incentives and enormous amounts of money to protect the latter. If the protections and subsidies are done away with and if the discretional faculties, nearly ubiquitous in the country, are reduced, the incentives will change radically. With different incentives it is possible to begin to construct an effective system of government buttressed by solid institutions.

This comprises a complex matter that requires much analysis, but it appears evident that the route of more controls is contrary to that of a better and more efficient system of government. In times when paradigms are debated it is necessary to think differently because simply doing more, even more efficiently, of the same implies ending up in the same place. A modern country requires a modern system of government. There is no greater challenge, but also an opportunity that is greater still.

*http://youtu.be/HziMXveQJto

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@lrubiof

A mature society, democratic and functional –the sine qua non for economic growth and peaceful coexistence- can only exist when effective checks and balances have been constructed. The problems that Mexico encounters these days, and that without doubt will confront the next government, derive from this fundamental void.

The president elect offered in his campaign something that Mexicans crave: an effective government. That offer corresponds directly to one of the greatest lacks of recent decades: there have been governments of distinct characteristics, but with very little capacity of execution, that is, they were hardly efficacious. The problem is that efficacy not only depends on executive talent in an administration: equally transcendent is the institutional context within which it operates.

Seen through the optics of the team that prepares itself for governing, the last thing it wanted was restrictions to its capacity to act. The best scenario for them would have been one of absolute control of the legislative branch for it to devote itself to “what is relevant”, to decide and to act. To leave to one side discussion and the blah blahblah (as PRIists previously referred to Congress) to do everything that was urgent for the country.Fortunately, both the electoral result and the recent evidence with the labor bill make it impossible to advance without negotiating a grand agreement based on the careful orchestration and summing up of disparate interests.

The government-to-be has thus the unique opportunity to change the current reality: to build the institutional structure that eluded the PRI through the 20^th century, a country of institutions. The irony is that what a PRIist government will be required to carry out is that this would have been more natural and logical for a historically opposition government.

Constructing checks and balances should not be observed as a concession to the society or to the opposing parties. In the campaign, the PRI candidate himself encountered the vicissitudes of diverse power groups that attempted to impose positions on him and to limit his perspective. That is what any society characterized by diversity and dispersion (political, geographical, economic) entails. Some of these powers flexed their muscles in the last months, but that was just a taste of what’s sure to come. Little by little each of these will begin to attempt to impose its preferences, forcing the new president to respond. At that moment he will come to grips with a fundamental fact: the existence of checks and balances is good for everyone.

In its essence, a society with checks and balances implies that no one can impose their will on the rest: the president cannot impose his, the television networks cannot impose theirs, the unions and their leaders cannot impose their, big business cannot impose theirs, the political parties and their perennial candidate cannot impose their. In sum, no one, from the government to the most modest of citizens -and including those (frequently brutal) de facto powers – can impose their will. The existence of checks and balances implies that the society is institutionalized, a circumstance that limits everyone across the board.

The great challenge of the Mexican society is institutionalization and this is nothing other than the development of checks and balances. When there is an effective system of checks and balances, each of the society’s actors and powers knows what to expect and, more importantly, finally recognizes that only joint action can achieve progress. The system wins when everyone wins, not when one can impose his terms on the others. It sounds like a fairy tale, but this is the essence of democracy: it only works when there are solid institutions that confer functionality on it.

When there is equilibrium the parties become the gears of a grand machine that makes society work. This equilibrium does not result from imposition from the central power, but rather is a product of a negotiation by means of which everyone ends up constructing the best arrangement possible. Unfortunately, despite that there were times (above all with Fox) when an arrangement of this nature could have been constructed, it never came about. Now this arrangement becomes not only crucial, but necessary. Necessary so that the next government can be both effective and successful.

The great challenge of institutionalizing the country consists of constructing checks and balances that, respecting the rights of all the powers, marks lines in the sand so that none can abuse the rest. That is, this requires a political negotiation that yields the best arrangement possible in which all fit but with delimited rights and power.

An arrangement of this nature does not imply the expropriation of rights nor imposition although, as in all political processes, it entails concessions and exchanges: precisely what the President elect has begun to do during this transition phase. What it does imply is an implacable and merciless devotion to the institutional, where the objective is a political arrangement that grants functionality on the system of government. This is about what we have not had since the eighties, a decade in which the old and by then exhausted Callista-PRI pact collapsed.

The efficacy of a government can be measured by the speed of its response, something that today’s president-elect Enrique Peña-Nieto demonstrated plenty of as governor. However, from the optics of the presidency, efficacy acquires a very distinct function to the extent that the strength of a country is not only gauged by the daily efficacy of its government but by the capacity to resolve long-term problems, as well as by the solidity of its institutions. Taking this to its most elemental example, while at the state level the approval of a governor can be sufficient guarantee for carrying out a determined investment that will begin and end during the governor’s mandate, at the federal level what counts is the reliability of the judicial processes, compliance with contracts and, very particularly, the impossibility that a company, union, a political group or a public power can abuse the others. Anyone who remembers the way that some of those “de facto powers” responded in the face of the mere possibility that the government might bestow a concession on a third television chain knows well that the Mexican political system will not be trustworthy as long as there are no checks and balances necessary to ensure that no one can abuse or impose their preferences on the rest.

The essence of what the country requires resides not in the approval or reforms of more laws (though that may be an outcome of the process) but in the construction of political agreements that lead to the transformation of the government (for it to be truly effective), to the legitimacy of the winner in the election and, as counterpart, to the legitimacy of the opposition and to the creation of an effective accounts-rendering regime. When Mexico has this, investment, employment and wealth will not stop thriving.

www.cidac.org

@lrubiof

The national “commentocracy” has a natural inclination toward Democratic candidates and more so on this occasion. President Obama irradiates enormous attractiveness, almost magnetism, and a personality that inspires as much due to his history as for being the first Black president of his country.Romney, on the other hand, has been presented in the media, there as well as here, as a radical Right extremist. Recent weeks have demonstrated that neither of the two biographies rings very true. Further afield than the preference that anyone in either country may entertain because ofthe candidate’s ideology or personality, my concern and perspective is more about the potential impact of each of the two options on the Mexican economy.

I have never understood the Mexican proclivity for preferring Democratic over Republican candidates, above all because, beyond the rhetoric, there is no evidence that one of these would be better for our interests than the other. With respect to political and legislative issues (such as migratory, drug and arms matters), the influence of an American president is relatively minor. Bush (George W.) as well as Obama promised a migratory reform, but neither achieved one being passed by Congress. In contrast, the impact of the U.S. economy on ours can be dramatic and this does not depend on any benevolence toward Mexico but rather on the conjunction of institutional and executive actions and strategies directly devoted to the welfare and development of the Americans themselves.

As in so many other things, perhaps no one explains the way that American politics work better thanAlexis de Toqueville, the French scholar who visited the U.S in the XIX Century and penned observations of prodigious farsightedness: “Long before the appointed moment arrives, the election becomes the greatest and so to speak the sole business preoccupying minds…. The entire nation falls into a feverish state; the election is then the daily text of the public papers, the subject of particular conversations, the goal of all reasoning, the object of all thoughts…. As soon as fortune has pronounced [the victor], this ardor is dissipated, everything becomes calm, and the river, one moment overflowed, returns peacefully to its bed.” The U.S. presidential elections will be over on November 6 and what happens after that will be what’s relevant: how it went for usin terms of the economic policy of the next administration.

The electoral dynamic changed radically over recent weeks for two reasons. First, and most important, because Obama lost the aura that protected him. For four years –in fact, throughout his (relatively) short political career-, Obama profited from his capacity to emanate that charisma that characterizes him and that allowed him to avoid having to defend or fight for specific actions or decisions. Perhaps nothing illustrated this better that his manner of handling the stimulus package at the beginning of his government: instead of advancing his priorities or those that his team considered those most likely to generate the greatest and speediest impact (the objective of any stimulus), he let his Party members in Congress determine the agenda, a circumstance that translated into an enormous dispersion of programs, many of these short of significant impact. But none of this appeared to affect Obama the candidate until he was unable to defend himself in the first debate. Although he recovered partially in the following two, the aura of invincibility had vanished.

The second reason that the presidential dynamic has changed is, simply and utterly, that Romney cast aside the radical farce that he devised to win his party’s primary-election showdown and has presented himself as the pragmatic, flexible and adaptable businessman that he is. I don’t know how good would it be for a businessman to occupya politically charged post of such decision-making transcendence, but what does appear evident to me is that his experience is, at least at the conceptual level, absolutely relevant for the present moment. Assuming that Romney would not to repeat the excessive expenditures of his Republican predecessors, Romney’s pragmatism would allow him to engage in the bipartisan agreements that are urgent in his country.

What the U.S. economy requires is the type of restructuration that the Mexican economy carried out, above all in matters of public expenditure, in the eighties and nineties. The rising trend of indebtedness due to Medicare and Social Security is of such magnitude that, on not resolving this soon, the U.S. will enter into a permanent, Japan-type, depression, dragging us along with it. Romney doesn’t seem to be a genius, but his professional experiences bringing off business workouts, and transforming bankrupt entities into profitable and successful projects are exactly what the U.S. requires today. In contrast with Obama –who little by little has been undermining what made his country’s economy so successful-, Romney offers at least the possibility of focusing on what is transcendent and likely to drive the growth of our economy.

Obama’s experience in the presidency as well as prior to that is totally shallow and alien to these matters. If one reads his books, his agenda is social and political more than economic. But the best evidence that he represents the least attractive option for us is the economic performance of recent years.It is evident that Obama stepped into a chaotic situation, but his strategy and actions have not improved it. He has achieved stabilizing the economy, but has not accomplished convincing his own society, starting with the American business community, of his policies. Unemployment remains at stratospheric levels, the deficit continues to rise and there is no program designed to confront either this paramount issue or that of the debt, even within a period of decades.

The defense that Obama brandishes of his performance is that things would have been worse had he not acted as he did. Although not a bad campaign argument, it is one that is impossible to prove in logical terms. What is indeed evident from the Mexican experience of financial crises is that imbalances sooner or later (sooner in ourcase) wind up deranging the economy. That hasn’t happened to the U.S. because of its size and importance and, no less importantly, because there are not many alternatives: the Europeans and Japan are worse off. However, if unattended, when the imbalances catch up with them, the cost will be dramatic.

Because of the latter it is so important when and how the Americans begin to face their structural problems. If Obama has proved anything, it’s that he doesn’t have a viable proposal. Romney hasn’t been convincing in this respect, but he undoubtedly understands perfectly well that the current reality is unsustainable and this, under these circumstances, is much better for us than staying the course headlong toward the precipice. What there’s no turning back from is that our future depends on how and when they act, the election thus being as transcendent for them as it is for us.

www.cidac.org

@lrubiof

The ongoing discussion on Mexico’s labor law offers us an exceptional window onto the world of unreality in which the whole of Mexico’s political class lives. Although there are doubtlessly many interests and values involved, not an iota of the debate has been concentrated on the only three things that are important in economic matters: creation of sources of employment, growth of productivity and connecting the manufacturing sector to that of exports. These are the three axes that matter and on which the attention of the Congress and of the next government should center.

Unfortunately, the discussion appears to be more of a combination of Alice in Wonderlandand aKafkian vestige of bureaucratic unreality.As in Alice, it arises from assumptions that have nothing to do with the reality.As with Kafka, it assumes that the status quo works and generates high economic growth rates and keeps the whole society satisfied.

We tend to prefer grandiose and complex solutions when much of what differentiates Mexico from economies that grow with dispatch refers more to regulations and quotidian stumbling blocks than to great constitutional reforms. In economists’ terms, the country’s growth problems have much more to do with affairs of the microeconomy(the overwhelming majority of which are under the control of the Executive branch and state and municipal governments) than with the Legislature.

If we accept that the paramount objective is raising the economic growth rate as a means of creating job sources and increasing satisfiers for the population, then all of the government’s action (in the broadest and most comprehensive sense of the term) should be addressed to creating conditions for this to occur. Certainly, there are many elements of action that can be undertaken to achieve this. Among these are public expenditures and infrastructure projects, as well as the assortment of reforms that is commonly bandied about (such as energy and taxation). While indispensable, these reforms and tools do not always lead to a more substantial growth rate.

Much more relevant for growth is the array of obstacles that confront business enterprises and potential investors for developing new projects and making successful existing ones. The economy is the sum of millions of decisions that consumers and the producers of goods and services make every day. Everything that impedes or affects these decisionsimpacts the level of general activity of the economy.

The bill approved by Congress in labor matters is a good example of what works and what doesn’t: on the one hand, the bill that materialized from the Chamber of Deputies opens spaces for novel ways of contractingpersonnel that, in time, would foster greater dynamism in labor relations. Things such as contracting on a trial basis, dealing with unpaid salaries during a strike and flexibility in the training of personnel allow greater competitiveness for companies, thus these should be welcomed. However, it seems to me that the pertinent question is whether these changes would make the formalization of companies that opted for this other world of the economy –underground- more attractive. There is vast evidence that the majority of jobs worldwide are created in small and medium enterprises, the overwhelming majority of which belong to the informal economy in Mexico. To what extent does this legislation contribute to attracting these enterprises to formality? This should be the gauge for success and for the relevance of a new law in this matter.

As I mentioned at the outset, the crucial issues for growth of the economy are productivity, jobs, and the linkage of the “traditional” manufacturing sector with that of exports. This concerns three issues of very distinct characteristics and dynamics, but in their entirety resides the key to growth.

Productivity is the result of all of the efforts made by the producers and of the obstacles imposed against these by the environment.On employing their tools  -such as the technology, production methodology and labor relations- the entrepreneur produces goods and services. Any change or obstacle in these elements increases or decreases the businessman’s costs, thus his/her capacity for producing better goods, at a lower cost and of better quality. The milieu in which companies operate determines their capacity to compete in the market. The smoother the environment the lower the costs and the more potential for raising productivity, the crucial factor in the creation of sources of employment and in the compensation received by workers and employees.

When one compares the environment in which a Mexican business concern operates with that of its competitors, the panorama begins to cloud over. There is no need to dig too deeply in order to identify the sources of the problem: import-tariff dispersion, discriminatory subsidies, selective protection (against imports), criminality, red tape, contraband, the cost of services, traffic, bureaucracy, etc. If one observes these factors in countries such as China, Korea, Chile and others with whom Mexican companies compete, the problem immediately becomes evident. And the solution to all of these depends not on great macroeconomic reforms but rather on small regulatory changes, transformation of the modus operandi of local and state governments and much greater competition in internal markets. Nothing legislative in all this.

Perhaps there is no issue of greater relevance for short-term growth than that of the ties of the manufacturing with the export sector. The Mexican economy is characterized by the existence of two distinct manufacturing sectors, which are nearly divorced from each other. Instead of domestic industry becoming the supplier of the export industry, the former has stagnated and ended up dependent, in good measure, on formal and informal protection mechanisms. A good microeconomic strategy would lead to the liberalization and deregulation of the manufacturing sector and to the creation of mechanisms that drive the shaping of a formidable industry of suppliers, by both domestic and foreign enterprises. Perhaps there is no better opportunity for growth of employment as well as of production in the short term.

Employment depends on the existence of favorable hiring conditions for companies. The best jobs are formal ones that, in addition, are those exerting the strongest influence on the economy’s long-term development.From there the importance of simplifying the fiscal and regulatory environment, as well as that of labor, to drive the expeditious creation of formal enterprises.Nothing like terminatingAlice’s dreams and Kafka’s realities.

www.cidac.org

@lrubiof

After the storm comes the calm. The country has for years experienced an escalation of violence that is intolerable for the population. The outgoing government responded with responsibility and with conviction but not with a strategy apt to steer the country into a good port. The population supported the government because it felt threatened, vexed, and abused, but not because it perceived an improvement now or in a reasonable future. Worse yet, inasmuch as the criminal bands break up and multiply, the losers are the citizens because narcos displaced in the wars among themselves end up moving into criminal markets, those that directly contravene the most vulnerable citizenry: extortion, abduction, and the protection racket.

From this perspective, it makes no sense for the incoming government to heed calls from the Calderon administration to continue pursuing a strategy that does not deliver the desired results. The notion that endless battering will recreate an idyllic past seems no different from an attitude reminiscent of when Don Quixote recalled times past, the splendor of knights in shining armor at the apex of their dominion, solacing the spirit with memories of the age-old feats and deeds of medieval gentlemen-soldiers. What’s salient and valuable of the current strategy dwells on the fact of confronting a problem that undermined the life of the citizenship and the viability of the State. Based on the lessons of the past few years, the future will require a different approach.

Although the objectives set forth by the government to combat crime have varied, the strategy has remained constant. The scheme followed to date has been clear: take control of the regions that have ended up in the hands of the narcos and decimate the criminal cartels. Although both components have advanced, the results are not praiseworthy: first, there have been unanticipated consequences and, second, the few victories that have been achieved have not been sustainable. Among the unanticipated consequences the most evident concerns fragmentation of the criminal bands: every time the head of a mob is liquidated an internal power struggle ensues that, in many cases, translates into a multiplication of bands. The strategy would make sense in a country with strong state or municipal authorities who, when the cartels were broken up could combat them successfully. In Mexico, where there has not been functional local government since Colonial days, cartel fragmentation has heightened the violence and eschewed the historical rules of not perturbing the population. In this regard, the initial success of some of the campaigns has morphed into an inferno for the people.

Along the way three myths about narcos, organized crime, and potential tactics for combating these have gained a foothold. First is the myth of prevention. It is obvious that, to prosper, a society requires mechanisms that prevent crime and criminality in general, as well as strategies oriented toward driving economic and social development. However, prevention makes sense and is viable prior to the existence of the phenomenon: what is already taking place cannot be prevented. It is urgent to construct the capacity of the State to optimize the safety of the citizens and, once that is achieved, to prevent future criminality.

The second myth is that of negotiation. The idea is that, instead of combating too powerful an enemy or one that is affecting the population systematically (both drug trafficking as well as extortion), the government would negotiate an armistice with the criminals and would pacify the specific region. Outlining this in the abstract sounds reasonable, above all for politicians whose function it is, or should be, to forge agreements, pacts, and arrangements among dissimilar parties. However, negotiation with criminals entertains evident problems: With whom would one negotiate? What would be offered in exchange? How would the pact be made to work and enforced? How would failure to comply be sanctioned?

The third myth is that of legalization. The idea of legalizing drugs is an elegant one and exceedingly attractive because it appears to indicate that the problem of violence can be dematerialized with the flourish of the signature on a presidential decision. It is not by chance that so many nostalgic former presidents propose this very action. Much the same as the idea of negotiating, practical problems render the framing of legalization absurd: How would the drugs be distributed? Who would be responsible? How would compliance with the rules be enforced? The key lies in the latter point at issue.

Although with diametrically opposed implications, proposals such as those of negotiation or legalization are unviable in the Mexico of today. In order for them to function, both strategies would require the presence of a strong government, one capable of establishing rules, enforcing them and having them obeyed. If we accept that the current problem is the weakness of the State, then there is no way to exact compliance from those with whom agreements were reached or to regulate market functioning were there legalization of drugs. From this perspective, drugs in Mexico are already legal (in the sense that they circulate with no difficulty) because no authority controls or regulates them.  A strong State like the Netherlands can entertain such a proposition; Mexico’s today cannot.

The same would be true in the hypothetical case of the U.S. legalizing drugs: the only thing that would change would be the financial capacity of the criminals (not a lesser issue) but the criminality besieging the population such as abduction and extortion would not be affected in the least. These are problems that reflect the absence of authority, the inexistence of the State as such, as well as mediocre and incompetent police forces, and a feather-weight and corrupt judiciary. The paradox is that to be able to contemplate strategies such as legalization or negotiation, the Mexican State would have to be transformed and, if this were achieved, those strategies would become irrelevant due to their being unnecessary. The essence of the issue is the government’s capacity and authority of the government. That is why it is critical to build (or rebuild) key institutions much faster and in deliberate fashion.

The future strategy should envisage as its objective the strengthening of the State for it to be able to impose the rules of the game, that is, to draw a line in the sand. The drug business, as distinguished from that of local criminality, would not disappear, but it would find itself head to head with a government capable of imposing the law forthwith. In this, the difference with the present government would be enormous because the objective would not be to eradicate narcos but rather to force them to live in an environment controlled entirely by the State. Just like the Americans do.

The true challenge of the upcoming six-year presidential term resides in strengthening the State without attempting to return to centralized control, but within the context of a decentralized society and an incipient democracy. It is, in fact, the opportunity of building a modern and civilized nation.

www.cidac.org

@lrubiof