“The first principle is that you must not fool yourself,” said physicist Richard Feynman, “and you are the easiest person to fool.” This is how our perception of Brazil seems to be these days: it is easier to conjure up barriers on likenesses and differences than to identify what is relevant and to adopt a strategy to deal with this.

There are many myths about Brazil and at least two conflicting dynamics. The first, the more prominent in the media, is the issue of bilateral trade. Here one can detect all the fears and fallacies that characterize a good part of the Mexican industrial sector. The other concerns the nature of the Brazilian economic policy and its supposed virtues. Fooling oneself is always pernicious.

Decades ago the Brazilians adopted an economic strategy devoted to promoting a certain type of industrial development. Since the era of the CEPAL (Economic Commission of Latin America) in the post-war period, they promoted heavy industry, high technology, and a local manufacturing base. The model adopted at the time was not radically different from Mexico’s, except that they, to a great extent due to the political weight of their military, devoted enormous resources to projects such as aviation and heavy machinery that were not profitable but that followed another logic. Some of their successful exports reflect that priority, although the cost of having arrived at that point had been monumental.

The main Brazilian exports, many of these high-tech, are concerned with agriculture and mining. Their great success of the past several years refers essentially to the enormous Chinese appetite for mineral products, grains, and meat. Just as we have a significant dependence on the U.S. economy, they have the same with respect to China. Time will tell whether one of the two was much better than the other.

But the principal difference between the two nations has little to do with their exports and much to do with the strategy. In the eighties, Mexico decided to abandon the development model based on the subsidy and protection of producers in order to privileging the consumer. This decision was based on experience: instead of decades of protection having translated into a strong, vigorous, and competitive industry, the Mexican productive plant –with many notable exceptions- had grown stagnant.

Why this happened or whether trade liberalization was the best response can be debated, but the fact remains that favoring the producer ended up being extraordinarily onerous for Mexican consumers who paid exorbitant prices for mediocre products. Much of the improvement in the well-being of the population of the past two decades had to do with the competition introduced by the imports. Today we have a hyper-competitive productive plant that, as a whole is far more successful than the Brazilian. The result for the country –albeit not for all companies- has been positive.

The Brazilians opted for another path. Although in recent years they have begun an incipient liberalization of imports, their baseline model continues to be the same: protecting, subsidizing, and privileging the producer. Thus is reflected by the trade conflict in automotive matters that has exacerbated recently. The decision to impose quotas on the importation of Mexican products denotes a less successful industrial strategy than is apparent and an obvious reluctance to compete. It is not by chance that Mexico’s per capita income is higher than theirs.

What has the Mexican response been? On the part of the government, the proposal has been to negotiate a bilateral commercial treaty that impedes changes in the rules of the game. On the part of the Mexican private sector, there is absolute rejection of any negotiation. The reasons are known: because the Brazilians take advantage of the situation, because there are security problems, because the infrastructure, because the costs of the goods… because we don’t feel like it.

Beyond the rhetoric, the posture of the Mexican private sector is contradictory. The main argument for rejecting negotiation is that Brazilian products enter Mexico without restrictions while Mexican exports to Brazil face permanent hindrances and a nightmarish bureaucracy. One would think that this argument would be, or should be, the principal reason for procuring a treaty guaranteeing the access of Mexican imports to that country. If the Brazilians engage in capricious mechanisms to control imports, the best way to eliminate this capriciousness is to negotiate certain and guaranteed access. Over the past decades, commercial treaties have become an instrument for breaking through impediments to access for Mexican products to other markets. Since Brazilian products already enter into the Mexican market, our private sector should be anxious to finalizinga treaty with Brazil as soon as possible.

The learning that I derive from these observations is that what we lack is a government capable of making good on the public interest. In this country we have ended up confusing democracy with paralysis. In the commercial ambit, the collective interest and that of the country should be that of the Mexican consumer and of exporters. Regarding the former, trade should be facilitated; and, in terms of the latter, the conditions should be created for these to penetrate other markets. Paralyzing business negotiations because one or two producers are opposed (for example, those of dried chilies, surely a basic product for the functioning of the economy, as occurred with Peru) is equivalent to sacrificing the rest of the Mexicans.

None of this denies the right of producers to protect their interests, but the function and responsibility of the government is to keep watch over the collective interest. One of the main problems of the country is that the “old” industrial sector, the one that rejects any and all trade negotiations, is not linked to the export sector, which renders it more vulnerable to any change. A government well in places should be making certain that this sector of the economy is subject to competition while having a proper framework to make it function.

Paradoxically, for Mexican industry to prosper it is necessary to let it fly, which implies deregulating, reducing import tariffs, and of course, addressing issues such as the cost of goods provided by the federal government (like energy) or by the suppliers of services whose prices are higher than those of other countries. This said, the industrialists who so bitterly complain should study how the Brazilian paradise works. If they believe that the Mexican bureaucracy is complex or that the prices of goods and taxes are high, they should take note of Brazil: everything that happens here is peccataminuta compared with what goes on there. Time to compete.

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@lrubiof

Would it be possible for a solution that appears to be perfect in concept to be nothing more than a false start, a chimera? Einstein affirmed that “we can’t solve problems by using the same kind of thinking we used when we created them”. It seems to me that in discussions on how to confront the narco and organized crime we have fallen into a terrain of solutions that appear perfect, except that they ignore the context within which the problems exist.

Legalizing drugs resolves all of the problems and does so in elegant fashion. With a legislative act, all violence vanishes, a business is legalized that today is illegal and, if we’re lucky, even tax collection grows. Above everything else, the notion of legalizing allows us to imagine a more peaceful world, less violent and kinder. It would be impossible to beat such an array of virtues.

The problem, as Einstein would have said, is that legalization constitutes a linear way of thinking about the problem: it ignores the concrete reality in which the phenomenon takes place. More than anything, it pays no heed to the conditions that would be necessary for legalization to function.

I detect two central problems with the notion of legalizing: the first refers to the nature of the drug market; the second, to our objective reality. With respect to the former, the relevant market is not the Mexican, but rather the U.S. one. In order for legalization to entertain the possibility of furnishing the desired effect, it would be the Americans who would have to legalize, because that’s the market that counts both by size and by the regional dynamics that it creates. Even so, it’s not obvious whether legalization as debated today would have the possibility of rendering the expected result, because the majority of those who champion legalizing drugs limit themselves to marijuana, that is, they don’t include other drugs such as cocaine and methamphetamines, which comprise the gross chunk of the business as it relates with Mexico.

The other issue is the truly relevant one: our problem is not one of drugs but of lack of State. Before the violence mushroomed to its current levels, the main problem was not the narco but rather organized crime (ranging from abduction to car theft and product piracy). The government, at all levels, has been incapable of containing it or forcing it into submission. The narco did nothing other than complicate it and make the challenge much greater. Our problem is one of police and judicial incapability. The State was brought to its knees by the problem of public security.

Mexico never had a professional police and judicial system. What it did have, throughout the greater part of the XX Century, was an authoritarian political system that controlled everything, including criminality. Instead of building a modern country, the PRI system constructed an authoritarian system that was equal to the challenges of its time and conferred upon the country the stability necessary for achieving economic growth and the consolidation of an incipient middle class. These were not lesser achievements when we compare the Mexico of the forties and fifties with other nations, but neither did they constitute the formation of a modern country.

Some will remember The Supermachos, a comic strip that faithfully reflected this era. The police chief and the municipal president were plainspoken, guileless characters who resolved problems based on what life had doled out to them. No one could accuse them of lacking in creativity, but their skill derived from experience, not from the existence of a professional apparatus. It was a coarse and primitive world. Thus, exactly thus, was the police and the judicial power. Not much has actually changed…

While problems were local and smaller, the state apparatus, in the broadest sense, was adequate and sufficient for dealing with them. Like The Supermachos, it wasn’t that there was a modern and sufficiently developed capacity, but rather that it was enough tokeep peace in the country. It wasn’t a modern state, just one that functioned for what was minimally required.

The gradual erosion of the system of political control and the eventual defeat of the PRI in the presidency put an end to the management of crime and, in a fatal coincidence, placed Mexico directly face to face with a assemblage of perils–organized crime- for which the country never prepared itself and, it must be said, is not even now beginning to prepare.This isn’t about guilt but about confronting the reality.

The growth of organized crime and the narco occurred under diverse circumstances, but these were fundamentally foreign to the internal dynamic of the country. Organized crime arrived to “take care of” a repressed demand for goods in great measure by the emerging middle classes who were laying claim to satisfiers like those consumed by the most well-to-do but without their purchasing capacity. Organized crime, transnational-scale, satisfied this demand at first with stolen cars and auto parts and then with products such as DVDs, CDs, etc., principally originating in China.

The growth of the narco responded to a good extent to changes taking place in other latitudes: the structure of the U.S. market; the success of the Colombian government in regaining control of its country;and closing achieved by the Americans of the Caribbean drug-trafficking routes. These three factors concentrated the narco in Mexico, consolidated the Mexican mafias in the business, and became a factor of brutal transcendence in the national territory. And in addition to this, there was the hardening of U.S. southern border after 9/11, with which, suddenly, the phenomenon acquired ever more territorial and less strictly logistical characteristics.

The underlying point is that the government did not possess the tools or the capacities to respond to these challenges. All of a sudden, at the beginning of the nineties, the country began to experience deep changes in its security structure that sealed its fate. First, a primitive and incompetent security system, totally politicized; second, the erosion of the traditional controls; and, the plate filled to overflowing, the expeditious growth of criminal organizations with economic might, armament, and the disposition to engage these at any price.

Legalizing (or “regulating”) would be a conceivable response in a country that possesses police and judicial structures that are strong and capable of establishing rules and making them stick. That’s what Mexico needs and this should be the issue that the government addresses with heart and soul. Until that happens, the idea of legalizing drugs will be nothing more than a water-cooler topic with no hint of reality. The problem in Mexico is the absence of State capability: the insecurity and the violence are the consequence of this lack, not their cause.

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@lrubiof

Alexis de Tocqueville, the famous French thinker and politician, coined the idea that certain countries would be exceptional, that is, qualitatively distinct from the others. Great myths have been constructed around this appreciation. What makes a society distinctive is the nature of its population, its history and culture, and its way of being. In this dimension, no two societies in the world are alike. But this does not mean that human beings are condemned to be like our predecessors, or that there is no power in this land capable of making us change.

Democracy, a theme that impassionedde Tocqueville, is a perfect example. For decades, if not centuries, only a handful of nations achieved being called democratic; however, today we are able to observe the manner in which democracy has become deeply rooted in societies that are as distinct as those of Korea and Japan, Chile and Spain, India and Mexico. Once these other societies appropriated the institutional structures necessary for democracy to function, it began to flourish. People who some decades ago rejected the possibility that the Mexicans could discern among candidates and exercise their right to vote have been overtaken by the dedication with which the population has responded in the nation’s elections.

We are distinct from other nationalities because of the culinary, cultural, architectural, and historical attributes that compriseMexicanness. These characteristics frequently make us feel exceptional. However, poor understanding of these attributes has become a dogma that holds us back from improving, from developing our economy, and from being successful.Many of the most recalcitrant interests in the country have seized upon the idea of exceptionality, not because they believe it, but because their objective is to maintain the status quo: the more people accept the latter as dogma, the better it is for these interests. Feeling exceptional is very good for our self-esteem, but terrible for development, because it implies that measures that work in other societies would not be applicable to Mexico, such as free trade, competition in the marketplace, good government, absence of corruption, an effective political system, or a richer society.

We are not unique or exceptional in terms of being unable to duplicate the successes of other countries or to adopt better ways of doing things.To accept the contrary would imply denying the freedom that we have as human beings for transforming and developing ourselves, as well as the responsibility for our own expansion. A nation that does not adapt is a nation that accepts that others –their politicians, their interest groups, or, as we call them in Mexico, the de facto powers- decide for the citizenry. Some see a political party as the cause of our ills, others blame individuals.The truth is that it is we the citizenswho have ceded our right, our freedom, to others to decide for us.

The political change of the last several years has been enormous and, nonetheless, insufficient. In the public forum, we Mexicans dream of a “velvet-like” transition toward democracy, as has occurred in some of Eastern Europe, or democracy by the consensus route, as in Spain. Today we know, or perhaps have yet to achieve assimilating, that these elegant solutions did not come about in our country. Our reality is that of a society that moved toward democracy but without the institutional mainstays and the decided participation of all of the political forces, which ended up translating into a great mismatch that does not permit advancement: the conditions necessary for favoring covenants of great depthamong political actors do not exist. However, instead of procuring the best arrangement possible, as so many other societies have done, we have remained mired in the nostalgia of the ideal solution. The alternative would be, rather than seeking an agreement among all the actors, to focus ourselves on a sole goal: the creation of wealth.

What Mexico needs is a new way of understanding its development, of accepting our characteristics and circumstances. Moreover, thepathway into which we are locked makes for a risky future whenever the minimal employment, opportunity, and income requirements that the population rightly demands are not satisfied. This reality propels us to think distinctly, to focus on our problems in novel ways. In a word: to stop aspiring tothe perfection that legitimately drives many grandiose transformation proposals, in order to devoteourselves to resolving the immediate problems that are urgent and necessary. Nothing is lost if, once advanced, the country finds better conditions for construction ofthe underpinnings ofan ambitious transformation, such as those that are mentioned but that are not feasible at this time and under the present circumstances.

The first heading to target for resolution is not that of institutional reforms under discussion, but rather, reactivation of the economy.Our economy has plodded along for decades without growing at the rhythm at which it is capable, but above all, at that which our demographic and social reality demands. A growing economy permits the attenuation of social conflict and contributes to resolving ancestral problems. This can only be achieved to the extent that all of us Mexicans adopt economic growth as the main objective of public administration, and in turn that all political and legal resources are devoted to acceleration of this growth. Thus, instead of dispersing efforts in numberless themes and reforms, we would address ourselves nearly exclusively to making possible the generation of riches, the resolution of problems that directly affect this in regulatory, employment, and political ambits.

The manner of articulating this objective is critical. In a wholly developed and institutionalized nation, the discussion would be carried out essentially in the legislative forum and the pertinent decisions would be made. In our case, the situation is very distinct. Mexico requiresleadership that is strong and effective and whose sole interest and objective is the country’s development. This leader would do his or her utmost to forge the agreements necessaryfor imposing the relevant accords and to join with the population behind a strategy fully dedicatedto the economic transformation of the country. Our experience with strong leaderships over the last decades has not been very good, but I seeno other way of achieving this transformation. Perhaps it depends on us, the citizens, to beready and willing to allow the emergence of a leader with these characteristics, but to keep an eye on the leaderthereafter like a hawk.

Prologue tothebook: Ganarle a la mediocridad: concentrémonos en crecer. M.A.Porrua 2012

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@lrubiof

On occasion we Mexicans don’t realize how uncommonly lucky we’ve been. Fraught with problems of our immediate milieu and thoroughgoing pessimists, we often do not recognize that the political and economic changes of the recent decades have been exceptionally seamless.

When one observes and analyzes the survival logic of regimes such as those of Cuba, North Korea, or Iran, we should be amazed by the ease with which the old Mexican regime with a siege mentality and rejection of the rest of the world became one integrated into world currents. So much so that this year our boast is that of the presidency of the G20 bloc of the world’s principal nations. We went from a socked-in, autarchic world, nearly one outfitted with blinders, to non-perfect but evident integration. And all this without too much ado.

Regrettably, this transition was not accompanied by a regime change. The PRI lost power in 2000 and there was no split with the old structures. The PRI’s separation or divorce from the presidency changed the country forever, but did not transform the political institutions nor did it create conditions under which the parties, beginning with the PRI itself, would modernize and transform themselves. Two presidential terms later, we are confronting risks of rupture, de facto powers, dysfunctional institutions, and the risk of restoration.

The present tessitura has inevitably returned us to the dilemmas that were faced after the 2000 election and that have not been well resolved to date. Today we find ourselves at a complex juncture at which the possibility is playing out of an attempt to restore the old regime (in two aspects, that of the seventies for one party, that of the sixties for the other) or the continuation of a transition that that has not yet taken final shape. The truth is, the country cannot withstand a restoration and it already does not function under the current orientation.

What the country requires is a regime change. In plain terms, a regime change entails the reorganization of the governmental institutions with the purpose of, first, ensuring that they represent the mosaic of alignments and political forces that currently embody the firmament and, second, that they are capable of making decisions regarding to the fundamental challenges that the country is facing in all ambits. The past fifteen years bear witness that the prevailing institutional arrangement is dysfunctional and that it does not respond to the needs of the country, while the last fifty demonstrate that it is not even logical, not to say realistic, to think about the restoration of a strong government, centralized, in which the president can impose his/her preferences on the society without transparency or checks and balances.

The big question is who would head a regime change and/or under which the conditions would this be possible. Unfortunately, at present there is no longer a sense of unity, a surprise, or an opportunity factor such as those that marked the 2000 PRI defeat. The circumstances and conditions that made 2000 an exceptional opportunity for transformingthe political system were unique and short-lived. The opportunity wasted, the great challenge now is to construct conditions that propitiate the transformation not achieved at that time. In contrast with 2000, rancor and polarization have the upper hand today, conditions that make securing so basic a process even more difficult. Worse still, insofar as the country does not advance, the possibility increases that we would experience the tail action of a (political) dinosaur (or of the de facto power) from which we have been saved to date.

Regime change is crucial because our country is at a loss due to the absence of the key democratic duo: checks and balances. There no longer is the system of imposition with which the country functioned for so long and we have not yet achieved the consolidation of a new system that works in the current national and international reality. That’s the challenge.

Each of the political forces has interpreted the current situation in its own way and has arrived at its own diagnosis.  The PRI as well as the PRD have proposed reconstruction of the central factor of the old system as the solution to the problem: the omnidominant presidency. One of these, the PRI, proposes it as the mechanism to regain decision-making capacity and advance in the process of development, while the other, the PRD, proposes it as a means of changing the course of economic policy, reconstructing the capacity of the State to preside over economic policy, and becoming the general factotum of the country’s development. As to the PAN’s role, the proposal consists of an agreement among the political forces to, from that point on, construct new institutions. Each party and candidate responds pursuant to their vision, history, and combination of relative strengths and weaknesses.

We can speculate on what the candidate would do if he/she was the winner of the election. However, the heat of the joust renders an exercise like this only marginally profitable because what is presented and argued is not, in the main, an integral proposal forgoverning, but rather what the context of a campaign itself endorses, which is nothing more than an amalgam of personality, ideology, and alliances, making it difficult to scrutinize the background of the ideas that lie behind. That is, if there are still any ideas at this time of the day.

It would be more useful at this point to discuss the importance of a regime change as a condition sine qua non for the future of the country. Few nations have achieved access to democracy with an integral political agreement that allows for continuity in the government’s quotidian activities while the institutions are transformed. The attractiveness of Spain in this regard is therefore enormous. However, more typical is the process of transition that is arrived at without a plan, without leadership, without vision. Many nations are found within this range and we are no exception.

But, as the saying goes, that’s no consolation. The only way out of where we are is to construct the capacity of the State that permits rebuilding of the institutional apparatus, development of a proper system of checks and balances (only one of the two components is no good: our paralysis is in good measure the product of just one side of the equation working, generating perennial uncertainty to all participants, the same as citizens, public officials, governors, and ministers). The question of the tallest order is how.

It is always possible that great leadership will be enlightened and produce the unification that is required. Great leadership –like that of Adolfo Suárez in Spain or Nelson Mandela in South Africa- can do miracles, but it is no substitute for checks and balances. That is, Mexico’s gamble must be institutional. The great theme that will have to define the current electoral process is who has the vision and capacity to lead in that direction.

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@lrubiof

The future is not something that comes about on its own. Rather, it is the product of decisions that are made, or not made, day to day. The entirety of the decisions made by a government, as well as the accumulation of actions and decisions undertaken by each and every member of a society, shape what that future will be. In this regard, if we don’t like the present, we need to think about the actions that would be necessary today for the future to be not only very different, but also much better.

The future is built. According to St. Augustine, time exists in three facets: the present, which is presently experienced or considered; the past, which is presently remembered, and the future, which is presently expected. This perspective of time and the future tells us that the present determines our vision of the future as well as that of the past. However, that of the past is solely explained in terms of the memory that we have today of what happened yesterday. In the case of the future, what is fundamental is that our actions of today determine what the future will be tomorrow. This is the perspective that animates the construction of a better future.

If we accept Saint Augustine’s conception of time, the future is no more than what we do today. This manner of observing the world is the same whether we devote ourselves to the future in full consciousness or whether we simply conduct ourselves as we always have. That is, the future is erected with what we do and with what we fail to do: everything comes together to fashion the traditions, policies, constructions, and social and economic organizations that befit the future. In this sense, the future is being built every day. But if there is no clear sense of purpose, no explicit objective to pursue, any road will lead us to the future, since they are all the same.

All societies that have achieved transforming and modernizing themselves, from Singapore to Spain, Portugal, Chile, and Korea, each with its own characteristics, have procured this thanks to the creation of auspicious conditions for this transformation process. Hence, their success is not due to things having suddenly changed, but to their doing everything necessary for this to occur. This is an intentional process that enjoys broad social legitimacy. To generate this sense of direction and organize the population and the government to reach this is our key challenge at present. It is the gauntlet thrown down to all of the political forces.

In the midst of the democratic and decentralizing maelstrom that has distinguished the country over the past decades, we lost something basic: the sense of direction to development that the country appeared to have found after a long period of indefiniteness. Nothing is worse for a nation’s development than the absence of bearings, because it is in these that the sensation of clarity concerning the future is forfeited, expectations are quashed, and, as if all this were not sufficient, special interest make their appearance, and their benefits grow at the expense of the rest of the people.

Clarity of course was lost between the sixties and the seventies: at the beginning due to structural problems, and later to the political conflict that we experience to this day. The era of reforms during the eighties and nineties, including NAFTA, was an attempt to define a new tack and to secure social support for this.   Unfortunately, the crisis of 1995 destroyed the fledgling consensus and opened Pandora’s Box vis-à-vis the future. Neither democracy nor alternation of parties in government have modified this reality. Political conflict has become a permanent feature. It is also the prime cause of the country’s economic stagnation because it is a source of perpetual uncertainty, investment’s worst enemy.

For some years, proximity with the most dynamic markets conferred an exceptional competitive advantage on our economy. Mexico not only achieved privileged access to the U.S. market, but in addition this proximity, conjointly with NAFTA, made the country an enormously attractive marketplace for the location of new industrial plants. However, these advantages eroded inasmuch as we did not raise the productivity of the internal economy and other economies left us behind. We, resting on our laurels, allowed countries like China to displace us in the export markets. Although some would attribute mythological conditions to the Chinese success, there is hardly a question that Mexico has lagged in all orders: from the educative to the infrastructural, passing through the fiscal system and elimination of bureaucratic obstacles. While the Chinese remove impediments to the creation of new enterprises, in Mexico we render the privilege of contributing to the growth of the economy ever more onerous.

We again find ourselves before a change of great magnitude in the world’s trade and economic circuits, which generates enormous potential opportunities for the country’s economic development, but these will not engender themselves. Regrettably, there appears to be neither clear-mindedness nor a willingness of the political forces to convert these opportunities into reality. The latter is particularly relevant: the essential characteristic of the construction of the future resides in continuity of public policy. The success of Brazil in recent years has been precisely that: its governments have changed but its development strategy prevails, transforming itself into the best incentive for investment. In other words, our future requires a political entente that enables continuity.

The last decades have been an authentic testimony to our incapability of articulating a development strategy that provides a sense of direction for the country: but the problem not only lies in the inability to articulate this, but also in the inability to achieve political consensus on its adoption; i.e., we have not been capable of sustaining a transformational process, which is the only manner in which a country can modernize itself and, along the way, create the jobs and opportunities that the population justifiably demands.

It is evident that the future of the country will require diverse reforms and changes, but the only way to contribute to the construction of a positive future in the Augustine sense is constructing political pacts aligned with a future to which all political forces and, of course, the society, are willing to subscribe. Our problem is not one of specific reforms, but of the political conflict that impedes according certainty to a population desirous of emerging from the present impasse to begin to construct a different future.

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@lrubiof

The key to success for a political strategist is to appear innocent and to have a reputation for honesty and benevolence. He or she who attempts to appear Machiavellian simply is not. At least this is what Machiavelli said. On voting last Sunday, the PANists would not have disappointed him.

The internal contest of PAN, the party in power, ended up as it had to and along the way yielded many lessons that merit analysis. Here are some that I observed.

Before anything else, the notion that opinion surveys are not relevant is a primitivism that is even touching. Worse yet, the systematic argumentation that the PANists are aliens, that their party roster is esoteric, and that the responses given to surveyors are not reliable all bit the dust. That those governing in the XXI Century continue to argue like the PRIists of thirty years ago is astounding.

The dynamic of the internal joust was in the end marked by the circumstances, as well as by the strategies and personalities of the contenders. The three (Santiago Creel, Ernesto Cordero and Josefina Vázquez-Mota) had (almost) the same conditions of entry and the three were free to decide on their action strategy. Each had successes and errors, but the result makes it evident that not all strategies are equal.

Josefina Vázquez-Mota concentrated on PANism and played this out in an environment of hostility generated by the governmental machine. Clearly, her strategy consisted of cozying up to the PANists, containing the government-controlled structures that favored one of her contenders, and avoiding a confrontation with the President. Her strategic playing field was determined by the need to avoid generating extreme reactions, a circumstance that eventually exacted a high level of generality of discourse.

Santiago Creel possessed the freedom of not being the favorite, but also of openly being the president’s opposition candidate. His strategy concentrated on differentiating himself from the government, posing alternative public policies, above all in the field of security, and on attempting to attract the PAN members lacerated by the way the present administration has conducted itself. Perhaps his main error consisted of not taking advantage of his trump card as tiebreaker: instead of becoming an independent force, he concentrated on attacking the leading candidate, at least speech-wise, thus being unable to be differentiated from Cordero and to emerge as the balance beam (even-steven). He inevitably ended up in third place.

Ernesto Cordero demonstrated that a candidacy cannot be constructed by dint of force and even less so by one whose offer consists of being the co-pilot. His strategy concentrated on attacking the lead candidate instead of approaching the PANists as a credible alternative. Still worse, utilizing unlimited amounts of resources, he wagered everything on the capacity of the party hacks to manipulate the PANists, whose DNA has historically been characterized by repudiating the imposition from above (a legacy of their decades in opposition to PRI that has remained in place with the last two PAN presidents). The country needs strong leadership and Cordero’s offer was to be an economist in turbulent times when at present, and different from twenty or thirty years ago, there are many competent economists among whom the next president could choose without difficulty.

The PANists demonstrated a great capacity for maintaining themselves above the petty struggles among aspirants to the candidacy and, much more importantly, above the flagrant attempts to manipulate the result. Perhaps what was most impacting was the abysmal difference between the PAN’s citizen base and the party leadership: the former stayed faithful to the history and traditions of the party; the latter acquired all of the vices and deviousness for which they have always criticized the PRI. And yet, they all put an extraordinary show of unity at the end.

For me, most noteworthy of the entire process that took place over the past several months was the astounding lack of strategic vision of the party’s leadership, beginning with the president and on down. For months I have attempted to understand the logic of president Calderon in this process. The evidence leads me to the following hypothesis: right from the death of the original dauphin (Juan CamiloMouriño), the president was unable to construct a strong candidacy as his  PRIsts predecessors had in the past. When he no longer had time on his side, he opted for an alliance with Marcelo Ebrard. Independently of the costs and risks that this strategy could have implied for the future of the PAN, the strategy persisted despite that the Left nominated a distinct candidate: the president’s Nemesis.

Following this logic, no one can believe that the president really imagined that Ernesto Cordero would win the constitutional election. Resorting to him had to have been the product of the president’s hope that Cordero would be the most faithful thrasher of the PRI candidate in favor of Ebrard. However, in a world in which the candidate of the Left was not Ebrard, this strategy was absolute suicide for the PAN but, above all, for the president himself. The absence of strategic vision and the inflexibility in the political operation was impacting. Strange like the dog ending up biting his own tail.

The strategy of the winning candidate was very much criticized in the so-called “red circle”, what the British call “chattering classes”, for following a script, for ignoring attacks, and for maintaining a general and vague discourse level. In the world of substantive debates in which the members of that “circle” presumably would have liked to see the candidates engaged, this comprised a real deficit. However, the measure of a strategy is not satisfying the critics, but rather achieving the objective at the least possible cost. From this perspective, the strategy followed by Vázquez-Mota was impeccable. There she is.

On the next stage of this succession process, the three candidates –Vazquez-Mota for PAN, Peña-Nieto for PRI, and López-Obrador for PRD- will have to convince the electorate of what they are made of, of their vision for the future and of their ability to bring it to life. The dynamic of that contest will thus be very different from what the PANists just went through. Logically, their strategies will equally have to be very different. Nothing new under the sun.

Elections are won or lost by the combination of four factors: strategy; organization; discipline, and candidate. Some strategies are excellent but the candidate is a dud. In some cases the candidate so excels that he/she overcomes the strategic failures. Sometimes neither the strategy nor the candidate makes the cut. Last Sunday’s result gives due credit to this series of permutations. Each will evaluate what worked and what failed in this contest, but there is no doubt that the sum of strategy and candidate, on the winner’s as well as on the loser’s side, made the difference. Machiavelli would have recognized it as such.

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@lrubiof

Oscar Wilde famously wrote that “to lose one parent may be regarded as a misfortune, but to lose both looks like carelessness”. It would be worthwhile to ask what the famous Irish writer and poet would have said of the investment levels that characterize the Mexican economy. If there is something that unites all Mexicans beyond parties and beliefs, it is the urgency for achieving high and sustained economic growth rates. Similarly, most economists coincide that investment is key, if not its only source, for growth. For this problem not to have been duly attended to, something must be rotten in Denmark. Or, as Wilde would have said, for such carelessness.

But it has not been due to lack of effort. In reality, from the end of the sixties –when the economy began to decelerate after nearly four decades of sustained growth-, all incumbents presidents have attempted to raise the growth rate. Some did this by getting into debt and exacerbated public expenditure, others through liberalizing the economy, and yet others, by means of diverse political reforms oriented toward consolidating sources of trust and confidence for entrepreneurs and investors. Many of these attempts and efforts are exceedingly commendable and some have become solid and reliable sources of growth, as illustrated by the export sector, which two decades ago simply did not exist. But, despite these successes, it is evident that the growth problem has not been resolved.

It wouldn’t be something new to affirm that there persists a world of obstacles to investment, impediments that surely explain one part, perhaps an important part, of the low levels of private investment. Some of these appertain to history, property rights, arbitrary acts by the government, lack of leadership, and, primarily, an irrepressible tendency to change the rules every time something bugs a government official. Allthisrevealsan acute institutional weakness that lies at the heart of the six-year cycles of yore: when presidents (and now, governors) achieve winning over the confidence of the population, their period of governance yields better economic returns. This story is well documented, but there are limits to the explicative capacity of the theme of credibility, above all because with the North American Free Trade Agreement (NAFTA) its relevance waned.

NAFTA’s core objective was to consolidate the credibility of rules in investment matters. That is, the government that promoted it understood that private investment did not flow precisely due to the problem of trust, which generates an institutional weakness that allows all civil servants to re-invent the wheel when they get up on the wrong side of the bed. With the clear and permanent rules inherent in NAFTA, as well as its credible dispute-solving mechanisms, investment would flow without surcease and growth would be sustained. At least that’s what the theory was.

In practice it’s been twofold: on the one hand, investment has flowed with no end in sight, which explains, to a great degree, the strength of the export sector. On the other hand, export-oriented investment benefits the internal market very little; thus, its economic impact is much less that it could be. That is, NAFTA resolved the problem of the economy with respect to the exterior, but did modify its internal dynamic. There we find the persistence of ways of producing and distributing goods and services that have nothing to do with what is happening in the rest of the world. There the Mexican economy continues to be closed and protected, products and services tend to be highly priced and inferior in quality, and businesses continue not adapting themselves to world-class competition.

This is not the moment to enter into the causes of this dichotomy, but the tangible fact is that we have two very different economies. The main consequence of this is that there is no liaison between the export sector’s hypercompetitive economy and that of the internal market. In contrast with other countries, the multiplier effect of exports on internal economic growth is much less in Mexico than in the U.S. or in Brazil: while every exported dollar adds 1.3 dollars of growth in Mexico, the number is 2.3 dollars in Brazil and 3.3 dollars in the U.S. The question is why.

When one hears innumerable business leaders speak of productive chains, it is evident that they are talking, at least conceptually, about this circumstance: the need to link the internal with the export economy. However, almost three decades after the liberalization of imports, we inevitably have to conclude that these chains to which private sector personages refer no longer exist and are not those that are required today. Without doubt, liberalization broke with the then-existing productive chains because it allowed new suppliers to enter the system. These new suppliers made it possible for many companies to become competitive, and thus capable of competing with the imports and to export. Domestic suppliers who did not regroup lost out because they were incapable of competing due to lack of the ability or desire to attempt it.

From this perspective, it would appear evident that an erroneous focus has prevailed in economic policy throughout this entire time: the hope has been that the Mexican private sector will do what it has not been able to accomplish in decades. The theory that the industrialists would become the suppliers of the exports, as occurred in Korea, simply did not happen in Mexico, for whatever reason. We can continue to regret what does not happen, or we can recognize the nature of the problem.

But the concept continues to be valid: Mexico urgently needs an industry of suppliers. This “new” industry must develop and be promoted under the rules that exist at present: that is, without protection, but with the express objective of raising the national content in order to generate more growth and more jobs. The greater the amount of goods produced in Mexico, the greater our capacity for export diversification, because we then will find ourselves within the possibility of complying with the rules of origin inherent to the free trade agreements with Europe and Asia that, currently, we do not. The evident implication of this is that the industrialists of the future will not be, in general terms, those of the past: they will be those who invest in order to become hypercompetitive and to connect with the large exporters. Many of these will be domestic, many foreign. The point is to produce in Mexico to make Mexico rich.

Investment is indispensible to growth. The missing ingredient is the adequate emphasis of the economic policy in order to achieve it.

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@lrubiof

Inherent in human nature is the desire for and expectation of improvement in life. However, less common is the recognition of what it would be necessary to do for this to be possible. Karl Popper, the great philosopher of science, once divided the world into two categories: clocks and clouds. Clocks are nearly, orderly systems that can be solved through reduction; clouds are an epistemic mess, “highly irregular, disorderly, and more or less unpredictable. The mistake of modern science is to pretend that everything is a clock, which is why we get seduced again and again by the false promises of brain scanners and gene sequencers. We want to believe that we will understand nature if we find the exact right tool to cut its joints. But that approach is doomed to failure. We live in a universe not of clocks but of clouds”.

We all know what we don’t like about the current Mexican reality. Some are upset about the criminality, others, by the economic performance. Some suffer through the daily traffic snarls and others are troubled by the uncertainty permeating the atmosphere. Identifying the problems, at least as symptoms, is quite easy. But we very infrequently rethink the implications of resolving these problems or, more exactly, reflect upon what would be required to make these evils go away. In a word, if we really want to construct a country that works and one in which these evils cease to exist (or are seen not as a factor of reality but rather as an aberration that must be corrected), we would have to change everything. The whole enchilada.

Earl “Huey” Long, a peculiar American politician, once summed up the dilemma perfectly: “Someday Louisiana is gonna get good government. And they ain’tgonnalike it.”A good government implies rules to which everyone must subordinate themselves, entails effective authority  for making people comply with the law, and, above all, implies genuine equality before the law. In Mexico, the kingdom of privilege, we do not satisfy any of these premises, not even in the public discourse.

Some weeks ago, in this surrealist world that is the Mexican reality, we had an opportunity to see a perfect example of the complexity that is implied in carrying out the type of change that the citizenry demands but that it is not always disposed to take it to a successful conclusion. The Mexico City authorities decided to install parking meters in diverse zones of the metropolis with the dual purpose of demotivating the use of the automobile and rationalizing the use of the streets and parking places. That is, this is an effort to achieve order in one of the city’s many daily issues.

The response did not take long to appear. On the one hand, the so-called “red flannel car parkers”, who, wielding red cloths, have appropriated public spaces to rent parking places, demonstrated against the measure by blocking some of the city’s thoroughfares. On the other hand, innumerable users of these car-parking services complained of the disappearance of a functional mechanism for daily life in the absence of formal parking lots.

In this specific case, the disorder is multiple. First is the appropriation of public space: if one does not pay the virtual “owner” of the street, one is unable to park. Second, persons visiting the place, working in the area, or engaging in some momentary activity use the red-flannel service so that their car is taken care of for a few minutes or for the whole day. This is not a minor service. Third, in the absence of effective police vigilance the red flannel caretakers fulfill an important security function: it has been demonstrated that there are fewer thefts of car parts and the cars themselves when the red flannel brigade is in operation. Finally, –a fabulous example of Mexican mischievousness- on one of the streets of the Pink Zone that I frequent, there have been parking meters for many years; there is a person, a former cloth wielder, and who now devotes himself to washing the cars parked there and to put coins in the parking meters when they run out of time to ensure that none of their clients’ cars incur a parking fine. The innovation and creativity never fail to surprise: but one cannot underestimate the problems these characters help allay.

Disorder is a big problem because it is accompanied by the absence of mechanisms for conflict resolution, zero respect for the laws and authority, very poor economic performance and, in the broadest sense, derives from the security crisis that we are living through and from the enormous lack of opportunities that characterizes us, which translates into poverty and inequality. There’s no such thing as “somewhat disordered”.Disorder is a general characteristic in which what is orderly is exceptional. Contrariwise, within a context of order, what does not work is perceived as an exception.

At present, unfortunately, we continue to live within a context of disorder where some things work but they’re in the minority. In the economic ambit, for example, the North American Free Trade Agreement (NAFTA) comprises a great order-imposing factor, but the internal market continues to be as disorderly as ever. In public debate –among politicians as well as within the business community- there always exists the predicament of advancing toward order or retreating toward the general. For many businesspersons, what the country needs is to generalize the disorder because that would avoid the necessity of raising productivity, improving product quality or, in general, bettering people’s lives.

The dilemma for the country is precisely that: for us to become a modern country implies that we all become orderly and that entails the end of privileges, cushy jobs, and special benefits. In their microcosm, the red flannel car parkers illustrate it perfectly: they have enjoyed exceptional privilege (though they don’t view it as such) and they are not about to change for any reason. Extrapolating the example to the national level, putting the country in order would imply reforming all the ambits of national life. That is, within a context of order, the existence becomes unacceptable of public or private monopolies; use of the bribe or corruption in general becomes dysfunctional; the informal economy stops being a folkloric element, becoming instead a blot on society that must be attacked, and so on. Within a context of order no one goes on as before.

The dilemma is weightier that it seems. Bringing the desire –or the discourse- down to earth in order to improve, to make Mexico a more amiable and more successful country and making substantial headway in the levels of daily life goes inexorably hand in hand with discipline, order, and equality before the law. Coming down to earth would imply that this would be accepted by the de facto powers, the wealthy, the politicians, and the rest of the beneficiaries of privilege: from the car parkers to the president. Or let there be a real change imposed upon them.

Karl Popper, the great philosopher of science, once divided the world into two categories: clocks and clouds. Clocks are neat, orderly systems that can be solved through reduction; clouds are an epistemic mess, “highly irregular, disorderly, and more or less unpredictable.” The mistake of modern science is to pretend that everything is a clock, which is why we get seduced again and again by the false promises of brain scanners and gene sequencers. We want to believe we will understand nature if we find the exact right tool to cut its joints. But that approach is doomed to failure. We live in a universe not of clocks but of clouds.

www.cidac.org

@lrubiof

Certainty about the rules is key for the functioning of an economy, as I affirmed in a previous article.Quite rightly, Carlos Elizondo made me see that many entrepreneurs do not want greater reforms: many want no more than a few changes that would render governmental regulations more efficient and less onerous to make them happy. In effect, the glorious age of the economy –the hard PRI years- were characterized by a pro-business and not a pro-market economic strategy. The collapse of the PRIist world and of that economic strategy was due in great measure to this contradiction and perhaps that is where the cause lies of the meager economic performance during these decades. Instead of competitive markets we have government-protected monopolies and this does nothing other than inhibit new investments, protect the privileged, and preserve an economic structure without opportunities for high and sustained growth.

Certainty in terms and permanence of the rules is central for an entrepreneur or investor to know what to expect and not to be surprised by every time the wind, or a new government changes. An economy grows when the rules are permanent, change little, and when they do, this is carried out in duly publicized fashion and consequently with the objective of preserving trust, growth and the general well-being. In the golden age of the“stabilizing development”–a closed economy- certainty was key and only the government could confer it.  Recognizing the essence of this equation, successive administrations were extremely careful to preserve a reliable political and regulatory framework for the functioning of the economy.

However, because it was a closed economy, in which competition was consciously inhibited (for example, through substitution of imports and the existence of government monopolies), the economy operated  with a limited mass of businesspersons and unions and did not pretend to have good products, low prices, or consumer benefits. The entire scheme depended on rapport between businesspersons and the bureaucracy, a relationship that determined companies’ profits in a much more relevant manner than the quality or price of the products. The objective of the economic policy was to benefit the producer as a means of maintaining high economic growth levels.

Deidre McCloskey* describes the scheme perfectly: “When American [input] producers get tariffs or when [manufacturers] get import quotas it is not because of their market power but because of their political power, their access to an all-powerful state”. Many Mexican entrepreneurs dream of returning to that scheme because on not having to be bothered with little things like the consumer, or the price or quality of their products, their life was simpler. Clearly, some of their criticism of the economic policy of trade liberalization that was adopted from the end of the eighties is correct; whenever the opening has been partial, a discriminatory protection strategy persists and governmental monopolies act, well, like monopolies. However, behind these complaints lies the desire to return to a world distinct from that of today, the one that collapsed at the end of the sixties simply because it wore out.

Discussion on trade liberalization and the adoption of a better development strategy tends to be obstructed on two planes. On the one hand, there are those who ignore or pretend that it is possible to ignore the changes that the world has undergone in the last decades. A growth strategy based on closed and protected markets was possible because production of the overwhelming majority of goods worldwide was concentrated on factories that on the one hand received raw material and that delivered finished goods (cars, radios, chemical products) on the other. In an environment of this nature, it was possible to force producers, domestic as well as foreign, to manufacture finished goods within the country. Thus arose, for example, the automobile assembly industry. This same ambit lent itself to rapport among businesspersons, union leaders, and politicians, in which it was in the interest of all to preserve and share privileges.

The problem for those imbued with nostalgia is that the world changed when the Japanese, with the need of raising their productivity levels in order to compensate for the high price of oil at the beginning of the seventies,   transformed the way of producing. Instead of manufacturing automobiles at a sole plant, they specialized their factories in motors, gear boxes, etc., with the purpose of raising their productivity dramatically, and with this, the quality of their products. Thus was born a novel productive structure based on suppliers of parts and components whose geographic localization would be determined not by the owner’s nationality but by the proximity of raw materials or final markets. Impossible for factories that existed in the sixties in Mexico to compete with this. The only way to survive in this world is to compete with similar productivity levels. The Mexican entrepreneurs who pretend to survive thanks to governmental favors do not understand that the government can protect them but only at the cost of the survival of the economy in its entirety.

The other place where discussions on liberalization and the role of the government in development are held up is in that of the privileges that persist and which more than one presidential candidate swears by. Once again the scholarMcCloskey**: “In the long run creative destruction relieved poverty. It has been in fact the only effective relief. Wage regulations and other protective legislation, contrary to their sweet (and self-gratifying) motives, have only preserved poverty”. A government supposedly dedicated to the general development of the country and concerned with poverty levels cannot (at least, should not) devote itself to protecting private companies or to subsidizing them, and it should also not preserve private or state monopolies. The contradiction is flagrant, but their persistence leads to the delegitimization of an economic policy centered on consumer, and not producer, benefit.

The prosperity of a country can only be achieved when the welcome mat is rolled out for entrepreneurs and investors with rules of the game that are the same for all, where nobody is discriminated against,and where privileges do not linger. That is, a pro-market, not a pro-business, strategy. It’s not the same nor is it equal.

* Bourgeois Virtues, p. 35, **Bourgeois Dignity, p. 425.

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@lrubiof