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.

www.cidac.org

@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.

www.cidac.org

@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.

www.cidac.org

@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.

www.cidac.org

@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

Someone mindful of Giovanni Giolotti’s tumultuous political career once asked him if it was difficult to govern Italy. “Not at all”, replied the old statesman, “but it’s useless”. His response would appear to have been emitted by the old PRI. In Mexico, the old system, which can scarcely be differentiated from that of the present, went through decades administering and managing conflict to a greater extent that solving the problems and attacking their causes. The result is a rich country with poor inhabitants, enormous potential but a miserable reality. The question is whether the electoral process as it stands can yield a distinct result.

The Mexican political world is full of nostalgic figures who pine for the era during which the government had the capacity to “make decisions”, that is, to impose the will of the president. Hearing and observing these lamentations, –which come both from all parties and from many scholars- one would think that Mexico was a model nation in which everything worked well, in which progress was tangible, and in which happiness reigned throughout. Yes, Nirvana.

Unfortunately, the reality is less benign. If one observes the PRIist era from 1929 on, it took more than a decade to arrive at stabilizing the country in order to begin to focus on economic growth. Then came 25 good growth years that, however, ran out at the end of the sixties. The decade of the seventies was a disaster of crisis, inflation, and disorder from which we have yet to emerge. That is the past. Today, one party proposes to us that we return to the policies of the sixties (the one that ran its course), and another proposes a return to the seventies (the one that led the country to explode). The third proposes that we go ahead with what currently exists.

Seen retrospectively, what appears obvious is that, with some exceptional moments, in the old era everything was devoted to administering problems more than constructing a solid platform of development. The government was undoubtedly strong and overbearing and had the capacity to define priorities, to make decisions, and to act upon them. It is interesting that it did not act to construct a modern country but rather to maintain its political viability. Without doubt, there were many good years of growth; however, when the need to reform the economy was bantered about in the seventies (decades before the famous, overdue reforms began), the criterion of “better leave it be” prevailed. The result was the catastrophic tragic dozen (1970-1982): another attempt to administer problems, in this case by means of exacerbated debt and inflation.

Had that enormous concentration of power that is so yearned after today been used for good, the country at present would haveincome levels similar to those of Spain or Korea. After the success of that era, one would have expected that the average Mexican today would be enjoying three-fold higher lifestyle levels, that the economy would be growing with celerity, and that our political system would be a model of civility. The fact, however, is that the concentrated power served to benefit those who retained it and not the population in general. That is why there were (and are) so many politicians waiting in the wings for the Revolution to “do them justice”.

The system that managed conflicts and held these back from exploding had a great advantage over the current situation: the population perceived the government with respect, if not with fear, something clearly undesirable from a democratic perspective, but that indubitably allowed for a peaceful coexistence. The police were corrupt but crime, which was also administered, was modest; judges were subordinate to the executive branch and no one limited their capacity to act. The narcotraffickers moved drugs from South to North and the system was sufficiently powerful to demarcate limits and impose conditions. It wasn’t perfect but it conferred stability.

The gradual collapse of the old system, a process that began politically from 1968 and economically from the beginning of the seventies, in the end bequeathed a political structure that was inadequate for dealing with today’s problems (qualitatively very distinct from those of that time) and a poorly organized economy and one not conducive to the promotion of high growth rates. Additionally, at present no one fears the government or its policies; thus, it is not even possible to pretend to administer the conflict. In other words, we continue to do the dead man’s float, but now without the benefits of the past.

In this context, the attraction that many see in a potential PRI return to the presidency does not lie in that it would solve the problems (there is not a shred of evidence suggesting that this would be the goal motivating its candidate), but instead the perception that it would at least keep the engine running. That is, achieving the reestablishment of the mediocrity of yesteryear.

The truth is that what the country requires is not another PRIist, PRDist, or PANist government, but a new system of government. What is urgent is constructing the capacity necessary for it to be possible to confront and solve the problems that have been accumulating for decades and that have turned us into a society that privileges the short cut rather than the cure, “let it go” above excellence, control over participation, “it’s better than nothing” over high economic growth, stability over success, copilots over leaders.

The country requires, nothing more and nothing less, than a new State. It would be worthless to procure the reconstruction of what stopped working a long time ago, as demonstrated by forty years of failed attempts. Nor would an effective government or an amorous one work. We need one that solves the problems.

As the electoral contest evolves, we citizens should exact responses and competence, experience and innovation, ability, and, above all, vision. The very notion that everything worked well before and that it would be sufficient to return to that idyllic world sounded very good in the couplets of Jorge Manrique but does not constitute a reasonable foundation for dealing with the enormous challenges confronting the nation.

The challenge consists of constructing a different future, a process that will take years, but that has to begin now. Key to its success will be, first, clarity of project: what is required; what are its components, and how it is to be constructed. Second, a clear and competent leader, capable of visualizing it, giving it form, and bringing all Mexicans together, commencing with the politicians and their parties, in a grand national effort whose characteristic would be plurality and convergence in a common objective. And third, the capacity to articulate its diverse components: vision; human and other resources; and the capacity for political negotiation.

The country has ways out, but only if it confronts and solves its problems.

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@lrubiof

“It would be blindsight to hide the obvious,” says John Womack: “that contemporary Mexico demands profound and responsible reorganization, a reorganization that conducts a cleansing of all the ends of the knot, and not only one”. If the country wants to emerge from the breach in which we find ourselves, we Mexicans will have to stop contemplating our umbilicus and begin to estrange ourselves from the wrongs that impede us from progressing. The first issue is what to change, and the second would be how.

The rhetoric and discourse on a “Reform of the State”, as well as  countless reforms directed specifically toward economic activity, are ubiquitous, but the content is always diffuse and the concrete objectives, of doubtful relevance. Some want something so great and onerous that its size alone makes consideration of it impossible. Others have such definite and particular objectives in mind that they end up trivializing the pressing need to reform the government and to make it capable of responding to the new realities confronting the country. The Mexican government over the last several years has been incapable of creating appropriate conditions to generate growth or to extinguish public insecurity, to attack poverty, or to provide Mexicans with an education consistent with the challenges defying the population in the labor market. No one is able to entertain the most miniscule of doubts that it is necessary to reform the government and the economy. But we have to begin at the beginning, at the objective. What is imperative is to create a strong State, one capable of governing.

At present, the Mexican government is everything but effective: it is large and unproductive; it impedes individual initiative and bureaucratizes productive activity; it generates instability and insecurity; it is not representative of, nor does it favor, the development of a responsible citizenry. In sum, the present-day Mexican State does not function for what is essential: to create the conditions necessary for Mexicans in general and the economy in particular to prosper. This and nothing else should be the purpose of the so-called reform of the State.

With such a clear objective, the question is why has the public debate not been oriented in this direction? Why has it concentrated on shifting themes that, despite the best efforts, are never resolved, perhaps evidencing the fleetingness, thus the irrelevancy, of these? Over the past decade, diverse and disperse themes have been discussed within this context, such as voting for Mexicans living abroad and the writing of a new Constitution, Federalism and the strength of the Legislative branch, ratification of the Cabinet, and reelection of legislators. The contrast with other latitudes could not be greater: on observing the prodigious moments of institutional transformation experienced by nations such as Chile, Spain, China, or Korea over the past decades, what leaps out at one is the disposition to think big and, at the same time, to get the entire population on board. Support of the population is crucial because without it, any reform will end up being pro forma, incapable of modifying the reality; participation of the population also would imply a greater degree of permanence. Thus, it is duly significant that, in each of those nations there was an ambitious attempt to advance a national transformation project leading to establishment of the bases for long-term development, as well as to reconciling their populations with themselves and with the past. In Mexico, there has been neither vision nor the capacity of conception. We should not be surprised at the result.

The Mexican government has been ineffective for many years, but this ineffectiveness has been exacerbated from 2000. Previously, until the mid-sixties, the government was very effective in terms of its own objectives, but extraordinarily ineffective in attending to the citizenry in any of its activities. What was important for the government was for the country to function reasonably well so that the members of the political class could reap the benefits. From this perspective, the system’s effectiveness was very high: there was stability, the economy more or less prospered, and the majority of the population accepted the circumstances with greater or lesser jubilation. This fairy-tale world came tumbling down in the seventies in part because the then-government suddenly decided to change the rules of the game, generating extraordinary levels of inflation, which began to eat away at everything: economic growth and social stability, education and family structure. The point is not to eulogize an era that, despite its achievements, was saturated with problems and conflicts, but rather, to watermark the era of decomposition and, later, the attempts at reform that followed.

Today’s brouhaha is not about specific and relatively minor reforms –of any type- but for an integral reform of the sources and distribution of power. No matter how profound and intelligent many of the proposals marauding around the public debate are, there is the risk of attention being paid a nonexistent problem, or, more exactly, that the underlying problem will not be addressed. The risk of a suite of reforms that does not resolve the problem should be of concern to all of us. If the problem is one of power, it will not be resolved with laws or reforms, but rather, with an in-depth political agreement that is subsequently codified into law. In this instance, the order of the factors does indeed alter the outcome.

The current political reality clashes with the institutional structure that characterizes the political system. If prior to that, up to the nineties, things worked badly, they have now taken a turn for the worse and, in addition, are dysfunctional. This is not the “fault” if anyone in particular, but rather, the burnout of an institutional structure designed for another age that is not in keeping with present-day circumstances and that does not respond to the realities of the power of today. It is urgent to redesign the institutions in order for these to be functional and to operate vis-à-vis the citizen. The vectors of change, of State reform, cannot be other than efficacy and rendering of accounts. But this cannot be imposed by decree: for them to work, they require a basic renegotiation of power, that is, the equivalent of the constitution of a foundational political pact: a strong State

We must not lose sight of the fact that a subsidiary objective to that of a strong State is that of conferring certainty and clarity of course on the population, and this can only be achieved insofar as there is a wide-ranging political agreement, accompanied by the mechanisms of checks and balances that make it effective. Nothing more, but nothing less.

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The world is racked with convulsions that shatter paradigms and certainties similar only to those that occur at transformational moments such as those produced by the World Wars: all of the traditional referents have been set on their heads. It is virtually as if the world were reversed, as if Goytisolo’s famous poem were truth and not mere satire: “Once upon a time there was a good little wolf that was abused by all the lambs. And there was also a bad prince and a beautiful witch and an honest pirate. All these things existed once when I dreamed of an upside-down world”.

The rich countries are in crisis and the poor ones spawn like mushrooms; the yen is strengthened and the dollar weakened; the Chinese travel to Europe and indignant Spanish youth protest in the streets; engineers in Bangalore keep the French financial system functioning while Japan’s debt doubles its GDP; China has been experiencing growth rates of over 9% for three decades while Japan practically doesn’t grow at all; Arabs rebel and Russians vote.

Something very big must be going on, but probably less so than what appears: the great change is the velocity of the communications that globalization produces, which generates immoderate expectations in all corners of the world. However, as numerous observers have argued in the past months, the sole difference with the Revolutions of 1848 was the speed of the contagion, not the fact itself.

As the saying says, “When it rains, it pours”. Each of these processes and happenings has a logical explanation but that doesn’t mean that the entirety is less impacting. If one reads the daily international newspapers, speculation on the consequences of these convulsions is more than galloping: whether China will be the new superpower or whether the government in Washington is going to collapse; whether democracy will overcome the Middle East or whether India will dominate the world of the future; whether Brazil will be Latin America’s nouveau riche, leaving us no more than the crumbs; whether Europe will become Muslim-majority territory. Anything goes and there’s no lack of reasons for imagining a distinct world. But imagination is no substitute for analysis.

The problems of Europe and the U.S. are very distinct but they converge at a fundamental point, the one that that afflicts Japan the most: their societies are aging and pension and health programs conceived under the paradigm of many young people sustaining relatively few old people is wreaking havoc. Insomuch as the aging population grows (and lives longer) and the proportion  of economically active population decreases, the result can be none other than the collapse of the state of well-being that for many is the epitome of civilization and perhaps the most attractive characteristic of many European nations.

In Europe there is well nigh no questioning on the “model” that they desire to preserve, but that does not diminish the financial challenge that their societies confront. Although the Americans age at a much slower rate, their challenge is similar in concept but the political dynamic is very distinct: there the “Blues” want to be more like the Europeans while the “Reds” prefer a model more akin to one of pioneers and adventurers who depend more on themselves than on governmentalTLC (tender loving care). The latter guarantees more fireworks but also probably, in the end analysis, the pragmatic solutions that typify them. In contrast, the Japanese have been stuck for more than a decade in good measure due to the paralysis of their political system that has impeded them from recognizing the nature of their financial problems and, no less important, because of a population that, content or not, lives so well that it prefers not to carry out changes in the status quo.

Rebellion in Arab streets responds to a combination of factors that reminds me a great deal ofPorfirioDíaz in 1910 and of 1968 student movement. Egypt is paradigmatic from the first simile:an unresolved succession, anageing dictator, incapable of understanding the way his society evolves and how novel forms of communications undermine the sources of political control. It may be that Saudi Arabia illustrates the second simile: success in creating a vigorous middle class brings about the seed of the demand for political participation and access to the decisions that will define their fate. It is no coincidence that it is the young people who are demonstrating.

The outcome of all this remains to be seen: the weaknesses of the “emerging” countries (like China, India, and Brazil) are very large and the strengths of the developed nations much larger. It is not obvious that one can extrapolate from the past few years, just as it isn’t evident that Mexico will remain permanently thwarted. But the implications for Mexicans are evident: we are neither growing like the emerging countries nor are we basking in a political structure capable of advancing reforms that are likely to be achieved. In a certain manner, we behave ourselves like the Japanese (paralyzed but not wanting to change) but without enjoying their quality of life. Thanks to the crises of the past decades, and to some recent reforms, our fiscal situation and pension financing structure are infinitely healthier than those in developed countries. In addition, although it’s hard for many to accept this, the political system, which was never as repressive as in other latitudes, has been opening breathing spaces for decades, and in contrast with the Middle East, the population is very conscious of the dilemmas that the country faces. We Mexicans might not be satisfied with the status quo but there certainly is no broad social base, one disposed to opt for violent or revolutionary solutions.

What is intolerable in Mexico, and what without doubt makes it resemble many other nations with which it isimplicitly compared, is the inaction. The security situation entails costs and indubitably dissuades many potential entrepreneurs and investors but is not sufficient explanation for the pessimism and paralysis that has overcome politicians and the population in general.

Each of us has their hypothesis of why Mexico findsitself in this state of mind but what is clear is that the country is in wait for someone else to resolve its problems. The demand for leadership is evident but also fraught with danger because, however much I am convinced that effective leadership is required, a society cannot be permanently put on hold. Mexico’s circumstances do not justify a street rebellion à la Tunis or Cairo, but it’s pretty much time for, beyond political, party, or ideological fancies, society as a whole to call forthe political class to get itself together and respond.

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