“Competing pressures”, wrote Kissinger, “tempt one to believe that an issue deferred is a problem avoided; more often it is a crisis invented”. That’s how we are with the continuing postponement of solutions to the issue of economic growth.

A key question for us is why doesn’t the economy grow? Or, in other words, why did the economy grow in the sixties and why are we unable to reproduce those very conditions now? If we ask an economist, the answer would be technical and probably correct, but after diverse attempts to start the economy -many of these contradictory- growth continues to be rachitic. Years of observing this phenomenon have led me to the conclusion that the cause of the relative stagnation (because the economy is currently growing well) is due to the presence of certain key components, but only a few of these are matters of reform. The main problem resides in the absence of certainty.

Understanding the past may perhaps allow us to realize that what made the economy grow in a sustained manner and for long stretches in the fifties and sixties but not now. On posing the problem in this way we will find explanations that transcend the strictly technical. If one observes how economies such as that of Japan or Korea could grow at such high rates for so many years despite their severe internal structural deficiencies, it becomes evident that economic explanations, despite being key, are not sufficient. For there to be growth, there must be more than a healthy structure; there also must be a perception amongbusinesspeople and investors that the country is on a clear course, that this direction is shared, at least in fundamental concerns, by the political forces overall, and that private investment is perceived as necessary and, even more than that, as a crucial component of the development of the country.

In the fifties and sixties, there was a framework of macroeconomic stability that guaranteed a clear platform for growth and impeded frequent exchange crises. More to the point, there was an implicit understanding between the government and the business community, which consisted essentially of a division of labor: the government created conditions that were favorable for growth, particularly through investment in infrastructure, while the private sector made productive investments in factories, services, and others. Of course, we’re speaking of a closed economy in an era in which nearly all economies were closed.  But what is evident when one takes a backward glance is that the key is not what the specifics of the development strategy but rather, the certainty (or uncertainty) that comes along with it.

The key, or a basic key, of the success of the industrialization process of the past resides in the existence of an implicit pact with deep and transcendent moorings: behind the division of labor was found an institutional arrangement, a set of rules that were transparent, albeit sometimes implicit, for all of the participants. These rules not only implied that the government was self-limited in its reach and in the type of policies that it could implement, but also demarcated the sphere of influence in tidy and transparent fashion.

The era of economic growth founded on this kind of implicit arrangement, high profit, and clear and transparent rules of the game collapsed in the seventies in good measure because the government did not recognize the implicit pact and began to change those rules unilaterally: it abandoned an explicit policy of macroeconomic stability; gave wing to an era of inflation; imposed price controls, absurd regulations, subsidies, investment restrictions; and launched a series of expropriations, the most politically charged of which was that of the banking system. All of this violated the implicit terms of the pact that for so many years had afforded strength to the economy and certainty to the private sector. What is amazing is the longevity of the era of distrust engendered from this.

The key issue now is how to recreate the pact that established the tidy game rules and that was fundamental for achieving years of high and sustained economic growth. How, in other words, to construct institutional scaffolding that permits the country to make the decisions that are urgently required for its development in the political as well as the economicambit. Part of the problem today lies in the diversity of authorities exercising jurisdiction over an enterprise’s activity, each with its own logic and motivation, but all demanding of bureaucratic satisfaction. This is what affects the small entrepreneur more than anything else. But perhaps the most important part resides in the perception that there is no long-term direction for the country, that the political forces do not have a commitment with a common objective, thus the country’s viability is always in question. This is not a problem of regulation, but THE central political problem of the country. Perhaps, if the economy were growing, many of today’s political conundrums would be easier to deal with.

In this dimension, only a political pact that commits to a common objective and to the rules for advancing in this direction could begin to construct the confidence that all societies require to prosper. Some of the participants in a pact like this would perhaps require eliminating or consolidating privileges, but those are diversionary issues. Mexico needs an explicit pact because the implicit ones have given their all. In addition, a pact of this nature would of necessity be coherent with the circumstances and realities of today’s world: that is, it could not negate the fact ofglobalization; the free trade agreements that already exist; and the requirements of the potential investors on whom depend, at the last analysis, the growth of the economy and employment.

Beyond the current problems with the euro, the process of European integration is an irrefutable illustration of that a legal and political environment that is sound and propitious for growth is the best prescription for the integral development of a country. It is evident that we are not European, but it is also evident that the countries that have prospered in recent decades achieved this thanks to their creating a climate of predictability that conferred certainty. There’s nothing without that.

If we aim at recovering the capacity of economic growth, we must create a new political pact and this is only possible by means of a legal framework that is enforced and not subject to abuse. This certainly cannot be constructed overnight, but if we don’t start to develop it, we’ll never get there.

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The businessman wished to develop a strategy for modifying certain regulations and increasing a few customs duties with the purpose of delimiting the capacity of his competitors’ access to the market. In other words, he wanted to create market failures that would benefit his bottom line. The consultant proposed the need to think on a large scale and for the long term: to accept lower profits in the short term in exchange for a bigger business in the future. The businessmanwas pursuing and protecting his interests, attempting to skew the means within his reach to increase the benefit of his company. The consultant was thinking about Mexico and its long-term needs.  The mismatch was evident.

This is a true story that I was witness to some years ago. The head of one of the important companies in Mexico was speaking with a former civil servant, now a business consultant. The advice given by the ex-functionary was serious, solid, responsible, and totally inappropriate for his client. While public officials make their living from thinking about the collective good and how to propitiate greater competition with fewer roadblocks for investors or, in the case of the politician, for contenders, businessmen (like the political parties and the candidates) perennially seek to bias the rules of the game in their favor. These are two normal visions, both necessary in a society, but not the same.

What interests the citizen, in his facet of entrepreneur, intellectual, or candidate, is to win in his own territory and space. What is of concern to a public official is for no one to abuse the situation and for everyone to have the same opportunity for getting ahead. The tension between the two is what makes an economy, a society, and political processes work.

I am not mentioning the names of those involved for obvious reasons, but on witnessing the exchange I realized that the institutional design of the IFE (the Federal Electoral Institute in Mexico) is wrong. What does one thing have to do with the other? Everything. The IFE came into being as a citizen institution because no one trusted the politicians and the moment was unique for naming a group of exceptional persons at a time that, as we have seen, would not repeat itself. Time has demonstrated that this was something unusual and unrepeatable. The first IFE citizen council conferred legitimacy on the elections and expunged, in an amazingly short period, the entire history of electoral abuse. Without the least desire to subtract anything from the council’s merit, an honest and realistic vision of that moment must also include the evident fact that the electoral process was celebrated and the council earned enormous prestige because the politically correct candidate won or, in even more precise terms, because the PRI lost. It is not obvious whether, had the PRI maintained the presidency in 2000, this prestige would have been the same, to say the least. 2006 showed aspects of the other side of the coin.

The irony of that first council is that its success threatened the politicians, that is, those who were indisposed to losing control of an institution so central to the game of politics. As soon as the council achieved obliterating the history of abuse and partisanship at least in appearance, the political parties assigned IFE council seats to individuals close to them and managed this with a strictly partisan criterion. The delay in naming three of the council’s missing members speaks loudly in this regard.

The IFE should be an institution of the State, one which is administered by professional public-service officials. Thus the relevance of the exchange between the entrepreneur and the former functionary: citizens are not the ideal persons to administer a State entity. These institutions, and even more so those who preside over such contentious matters, require the mentality and long-term vision innate in a public functionary and that distinguish the latter from the average citizen.

This is not an issue of a citizen being incapable of or poor at being responsible for a State institution, but his vision and perspective is, by definition, short-term. A citizen -whether an entrepreneur or an intellectual- knows that his mandate is finite and this, inexorably, leads him to contemplate his next means of livelihood (the same as, surely, politicians). In contrast, a permanent functionary has a long-term career that sheathes him and confers upon him the certainty of permanence that is indispensable for administrating with fair criteria and in the general interest. A citizen, however disinterested, will always be pondering his future and will put it at play only to the degree that it will not affect his prestige or perspective for employment.

Also, this is not meant to be a criticism of individuals who have served on institutional councils such as the Federal Electoral Institute or other regulatory instances that have followed a similar path. The dedication and commitment of many of these persons is laudable and absolutely respectable. But, in terms of the country’s development and the construction of institutions that afford strength and permanence to political stability and economic growth, and as human beings, these are people who will always be contemplating their personal future.

The presence of exceptional citizens in entities such as the IFE, the Federal Public Information Access Institute (IFAI), and entities of economic regulation (such as the Federal Competition Commission, Telecommunications, and Energy) has permitted us to deal with and advance through the difficulties and avatars of a complex political and economic transition over the past decades, but has not led to the consolidation of strong, permanent institutions. I entertain not the least doubt that part of the success and smoothness of the transition that we underwent in 2000 was due to this team of citizens who understood the moment as few did. I am also certain that this period is over and that the citizen presence no longer contributes to the institutional development of the nation.

At this new stage we require strengthening of the State and its civil service, granting it permanence and solidity. This is only achieved with career civil servants, independent and non-partisan, with not only the time horizon inherent in the governmental function, but also with the vision of the State, which implies looking after the collective interest, balancing private interests, and creating, and managing,  identical game rules for all. In other words, it is time to construct a State with the capacities and attributes that the country requires for the future. Never could a citizenry, regardless of how altruistic and well-intentioned, achieve this. John Stuart Mill, XIX century philosopher, said that “all political revolutions, not affected by foreign conquest, originate in moral revolution. The subversion of established institutions is merely one consequence of the previous subversion of established opinions”. To carry on with, and above all, to conclude, the transition upon which we have embarked, we should move ahead to the institutional stage, to the strengthening of the State.

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According to a biblical story, a family lives in a room amidst overcrowded conditions, which generates interminable conflicts. The father decides to consult his rabbi, who tells the afflicted father thathe should put all of his hens in the room and come back after a week. Seven days later, the man can’t stand another minute of it, but the rabbi tells him to put the rest of his animals in the room and to come back in a month. When the month is up, desperate, the father arrives ready to fight the rabbi. The rabbi tells him to take the animals out of the room and to come back in a week. Seven days later, the whole family returns with enormous smiles on their faces: they are all happy because they are living to their hearts’ content in the same room that only a few weeks before had seemed such an uninhabitable place. That appears to be the strategy of the government of the Federal District: turn up the pressure in all ambits –traffic, infrastructure, water, social programs, development plans- to such a intense level that, when the works projects are over and everything’s returned to normal, we, the inhabitants of Mexico City, will feel rejuvenated and happy due to the grandiosity of the governmental actions. As political strategy, this is an unsurpassable project. As a platform for the development of the city, –or of the country- it is nothing more than a mirage. Like the biblical anecdote.

When one hears about the enormous governmental programs and the achievements that have been reached, there’s nothing left but to ask oneself if the citizens live in the same place as our authorities. According to the city’s head of government, the Federal District has resolved the main problems, the bases are being set in place for a stupendous future, and we are well on the road to development. I ask myself, where did the holes in the street, the water shortage, the traffic, and the growing criminality go?

It is evident that a city abandoned for so many decades would be suffering from all types of problems that cannot be solved from one day to the next. Similarly, the hardships generated by the improvement process are high and have no remedy: a street or a Metro line takes time to be constructed, the period from when the work begins and ends is not agreeable nor should it be undervalued and, as much as the citizenship might complain, these are inevitable, thus tolerable, costs. Truth to tell, the population has been more than stoic in its acceptance of the costs and the hardships.

What are disputable are not the problems themselves but the pretension that these are already resolved. Instead of advancing a long-term vision for city development (and, for obvious reasons, for the country), what we city inhabitants have been hearing are grandiloquent statements about achievements that do not exist. The lack of planning is scandalous: there are streets that have undergone important public works programs in recent years (for example, underpasses or bridges) and that are now being newly opened for some other project. It’s not that the project is bad, but rather that there is no continuity in the works, which reveals that instead of vision there is reaction.

Everyday life in a city as complex as the Mexican capital is difficult in itself. The typical inhabitant works far from where they live and this implies wasted hours in getting to work, hours that are multiplied by traffic problems that never seem to resolve themselves. In addition to this, criminality dominates the minds of the inhabitants: the fact that the number of deaths is less than in other parts of the country does not mean that congratulations are in order because they do not exist. The number of abductions, robberies, and assaults continues to be very high and is incongruent with the desire to convert Mexico City into a financial and tourist center and one of knowledge development and scientific research. No capital resident is unaware of the real and potential assets of the city: but it is insufficient to possess these, constructed as they have been over decades, in order to suppose that they are inexorable mainstays for a promising future.

Perhaps the city’s true problem lies in the incompatibility of the system of government with the needs and problems of the huge urban concentration. The city requires a long-term development plan and vision and a professional administration devoted to implementing it systematically. When the administration and the city government change every six years and devote all of their energies to constructing a presidential candidacy, city development is curtailed and never procured. The incentive for the governor lies in concentrating on what is popular or most visible (and to blow one’s horn about it for all it’s worth) rather than devote oneself to an integral long-term project. Despite the latter, it must be recognized that the current city government has sustained projects, such as that of the Supervia (San Jerónimo-Toluca), despite their being unpopular.

The problems of the city are evident: wastefulness of water is extraordinary, to the degree that  it is estimated that more water is wasted in Mexico City than the total water consumption of the city of San Antonio, Texas; public security is an illusion; the quality of the asphalt, even on recently “paved” avenues (such as Reforma) is pathetic. Even problems such as those of the traffic are often due to the bottlenecks produced by improperly parked cars, street vendors, street repairs, and poorly designed traffic loops, which denote a serious problem of the absence of authority. If one were to observe the traffic from above, traffic jams would be seen across the board. Some of these undoubtedly require large works (traffic grid arteries and second-level traffic lanes), but many require small and concrete actions, in addition to willingness to force compliance with the rules.

In addition to “ancestral” assets, a city at the vanguard requires a long-term vision, a population aware and convinced of the project, and the capacity to carry it out. We have at present a paradoxical combination: great assets, a population with no idea of where we’re going (or whether we’re going), and a great capacity for implementation. What a pity that vision and pursuit of conviction are lacking. A population that knows where it’s going and that can trust its authorities to achieve this becomes any government’s best asset, above all when, counter to what many suppose, everything indicates that the future will reside in great cities that are “intelligent”. Without vision, without security, and with the worst of services, none of this is possible. The great projects end up being a mirage.

Mexico City is perhaps at the vanguard of Tapachula, Lima, or Lagos, Nigeria. However, the relevant comparison is Kuala Lumpur, Seoul, or Beijing. In the light of this paragon, it hasn’t even begun.

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Whenever I see or find out about cases of corruption in Mexico, I keep thinking of whether the country has changed or whether everything remains the same. Some things continue being the same for decades if not centuries. Others, contrariwise, change swiftly. What is the real Mexico, the one from before or the one now? If one takes a backward glance, it is evident that we have experienced profound changes, some dramatic and many exceedingly positive. In the same fashion, some things appear to be permanent, immovable. What will remain permanent, that which doesn’t cede or that which has just been built?

Like so many other things in the country, the answers are essentially grey in tone rather than black or white. Before, corruption was a component inherent to the political system. Today we see corruption as an evil, as a distortion in an unfinished process of modernization. The old PRIist saying, “don’t give me anything, put me where there is”, is a faithful reflection of a political system built by the winners of the revolutionary exploit and dedicated to benefit their own. That system, still alive in more than one corner of the country, was constructed under the promise that to those who were loyal and who obeyed the chief du jour, the Revolution would “do justice by him”, that is, would give him or her access to power and/or wealth through corruption.

Perhaps the greatest merit of the PRIist regimen was the achievement of pacifying the country without being excessively harsh. The country proceeded from the extreme violence of the civil war years to a productive peace from the mid-thirties, all this without having constructed the Rule of  Law, but rather, a political structure that, on privileging discipline, maintained peace and stability. This is the world that Graham Greene portrayed in his book The Lawless Roads on the Mexico of the thirties, in which the author describes a desolate place where corruption reigns and the most modest inhabitant has no alternative other than to accept life as it is, a lawless world and one without the possibility of achieving the most minimal respect for his rights.

Decades afterward, the incipient industrial companies that were the product of the imports substitution program, lived with another facet of the same reality: the Ministry charged with supervising and regulating industry was a breeding ground for interminable corruption where everything had a price: import permits; export permits, and authorizations for investment. Businessmen were required to ante up for everything: to obtain the permit or so that his competitor would not obtain it, to accelerate some paperwork, or to paralyze it permanently. Everything was up for sale. A world unto itself.

But a world that ended up changing. When opening to imports and economic liberalization came about they rendered these controls irrelevant, the bureaucracy lost its corruptive power and the Ministry was downsized from more than thirty thousand employees to fewer than three thousand. With the end of controls the possibility of extortion, the value of paper pushers passing documents from one desk to the other and of these procuring the signature of the responsible party disappeared. Although many indirect control mechanisms have returned and the logic of control persists, that bureaucratic corruption disappeared from the spectrum of the prototypical entrepreneur’s considerations. Now what counts are production, quality, and the market.

The example depicts how corruption does not have to be permanent. It also illustrates the nature of our bifurcated reality: although many things have changed, many remain. The old Mexico of corruption has stopped being valid in some ambits but persists in others (those that have not been liberalized and where the bureaucracy is in control). The true issue is this: we have not achieved completing the transition process to modernity, to a space where coexistence is governed by impersonal rules (the law) instead of by personal relationships (where corruption is never far removed).

The existence of the two contrasting yet simultaneous realities describe a country that has changed begrudgingly, without an integral project of modernization and without the capacity or disposition to articulate a consensus regarding an objective likely to enthuse the population. This duality was present when, at the beginning of the nineties, the government recognized that it could not pretend to be modern and, at the same time, maintain the hegemonic party through funds procured directly from the public purse.However, the solution that the government proposed was not at all modern, i.e., that the businessmen who were beneficiaries of the modernity would sustain the party.

The mixture of tradition and modernity, corruption and transparency, has prevailed in these years of change. At least hypothetically, one possible explanation for many of our day-to-day ravages are concerned with precisely that permanent contradiction: where opaque spaces are in the end not annihilated and many of those that should be transparent are far from being so; where competition continues to be an objective rather than a reality, but where advances are attempted with the methods of before; where the spaces of corruption are still too many and return much more quickly than others evaporate.

Many blame the politicians, the businessmen, the unions, and the governors for every type of evil because they can get away with it, that is, because the system lets them. The opposite is also true: until and unless the society desires to live in a regime of transparency and refuses to accept the rules of opacity and corruption, the latter will continue to survive. The reality is that it is convenient for everyone (or at least most perceive it is) to solve a problem with a bribe or to avoid a nuisance with an “outside” arrangement”. The problem is that convenience has its counterpart in corruption and the one cannot be cancelled out without finishing off the other.

The country that Greene described eighty years ago continues to possess underpinnings of reality and this is a tangible demonstration of how much we still have to go. But the example of SECOFI (ministry of trade and industry) in the eighties also illustrates the possibilities held out by a deep structural change. Perhaps the tragedy of the modern Mexico –and I say tragedy because it entails a context that made possible the growth and development of criminal organizations with the end of the old system and the absence of the type of controls that a modern country requires- is that the idea and instruments of modernity have not permeated into the majority of the members of the political class nor into society in general. In addition to being highly improbable, to await a great leader who will change everything and be our savior along the way constitutes an old way of attempting to construct modernity.

The country will continue being corrupt inasmuch as we all continue liking it like this.

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For Lenin, “the organizational question is at the center of everything”. The Russian revolutionary leader was referring to the way that the Bolsheviks should organize themselves, but the principle is similarly applicable to our present reality. The country’s tiller has been inoperative for years, a situation that has been exacerbated by the poor quality of our recent governments but, above all, by the growing violence that intimidates the citizenry and that does away with opportunities for development. The least one should ask is what this situation offers for the future.

The theme exerting the greatest impact is without doubt that of violence and insecurity. Fragmentation of the drug cartels and criminal organizations has done nothing other than raise the number of deaths but, more than anything else, increase crimes against the citizenry. Until some years ago, crime comprised stealing cars, narcotrafficking, piracy, and other issues, all criminal but with relatively little impact on the manin the street.This all has remained in the past: today citizens endure raids, abductions, extortion, and a climate of violence that generates fright and ill feeling. Nothing is of greater concern for a society than this lethal combination.

The objective situation has generated enormous political controversy. The surveys show that a broad majority of Mexicans consider that the country is going badly.Many of the victims and their families clamor forsolutions and politicianson the campaign trail criticize the government. Beyond the specific critiques(how to “do it better”, add “intelligence” or a “better strategy” into the mix), there are no proposals that advocate a radical break with the government’s stance. Undoubtedly, many critics are correct in that the strategy of decapitating the criminal organizations has done nothing more than splinter and multiply them. However, whenever I listen tothe critics as well as to the pathetic governmental explanations, I am left with the sensation that there is more of an enormous desire to return to an idyllic past than a recognition of the true complexity of the situation.

Perhaps there is no more frequent convocation than that of negotiating with the cartelsor returning to the PRIist world where criminality did exist but was administratedand, fundamentally, did not affect the population. In addition to the practical impossibility of adopting an avenue to negotiation (with whom? how to make it stick? in exchange for what?), the reality is that –whatever some gone-astray PRIists say- governments do not negotiate (nor did they in the past) but instead, they established the rules of the game -and were capable of enforcing them. During the years of the hardPRI, the government was very strong and the narcos wanted nothing other than to move merchandise from south to north. There was no territorial theme nor were there high-powered weapons.Something akin this exists in countries like the U.S. and Spain, where drug distribution is tolerated as long as there is no violence.That world disappeared in Mexico for three reasons: first, because power was decentralized (i.e., “democratized”); second, because criminal organizations began to proliferate in the country, taking advantage of the rough-riding river, and third, due to the weakness of our police and judicial power at all levels, but above all, locally.

We must not forget that this era of violence began during Carlos Salinas’ term of office.Calderón may have erred regarding the specific strategy of cutting off the heads of organizations,but the problem arose before thisand, I am certain, would have grown much more rapidly had there not been a governmental response. But it is there that the fundamental problem lies: our institutions are not adequate for the challenge confronting them. The PRIist system worked because it was authoritarian, not because it was institutional, and it crumbled because that authoritarianism did not permit growth of the economy, propitiated frequent crises, and was racked with burgeoning illegitimacy.The solution will not come by way of imposition, but rather, by institutional construction.

Five years after the initiation of the war against narcotrafficking, the balance is positive in one aspect and very negative in others. It is positive in that the narcosencounter a decided and decisive government and that they no longer have unrestricted capacity of advancement and growth in their business affairs.It is negative in the numbers of violent acts, in the disintegration of the local equilibrium and, above all, in the proliferation of crimes against persons who are neither in fear of or in debt to the criminal element.

Viewed from a long-term prospective, the country has experienced two successful epochs: the Porfiriato, and the good two to three decades of growth of the PRIist era. The common denominator was centralization of power. PorfirioDíaz centralized power, combated regional caciques, ended decades of instability, uprisings, and revolutions,and gave the country some years of peace for it to prosper. The PRI pacified the country, maintained stability, and achieved an equilibrium that was conducive to growth of the economy. Both periods collapsed under the weight of their own contradictions and limitations. Those who believe that the way to the future resides in the reconstruction of power–by route of a strong, Miguel Alemándevelopmentalist-type government,or by means of repression and manipulation through Putin-like management of the securityservices-,should observe not only the collapse of hard regimes but also the prosperity of those that are democratic and consolidated. No one in their right mind could doubt the inadequacy of an attempt to reconstruct what fell to pieces, even if it were garbed anew.

Re-concentration of power is not the way out because it is adverse to the growth of businesses and the economy, the generation of wealth, and the development of individual creativity, whereinlies the future. The way out can be only one: the development of institutions that confer certainty on the citizenry, on investors, and on individuals in general. Criminality has grown because we do not have strong institutions–police, judicial power, local governments- with capacity of action and that avail themselves of a credible model and authority in the eyes of an incredulous citizenry.In other words, our problem is not criminality and violence, but the absence of State, the dearth of competent governmental institutions capable of maintaining order, imposing rules, and gaining the respect of the citizenry.

As Einstein said, “a perfection of means, and confusion of aims”, seems to be our main problem. What is shocking today, and what is worrisome, is the effrontery and brazenness of those who seek power without taking note of the causes of the disorder and the risks that everything will continue in decline. And, certainly, their responsibility in the origin of the chaos in which we find ourselves ensnared at present.

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When in 1688 the last Jacobite sovereign, King James II, decided to ignore the laws of Parliament, he was promptly deposed, giving birth to modern British democracy and its English Bill of Rights for the citizenry. This revolution also made manifest the essence of the functioning of a political system and its cardinal guarantee of stability: checks and balances.

If a certain politician or interest group abuses this, it is because they can: if there were effective checks and balances, they could not. Checks and balances are the essence of a democratic system of separation of powers. Their existence implies that each of the branches and levels of government possesses limited prerogatives and depends on the others in order to operate. None is effective in itself, but all work together as a whole: when all entities –Congress, the Presidency, the Judicial Branch, the states and municipalities- recognize their limitations and mutual dependency, the system achieves a harmonious operating capacity. In Mexico, we have many powers with the capacity for obstruction, but nearly none with true equipoise. Perhaps the sole exception, albeit incipient, would be the counterbalance that exists between the Federal Electoral Institute (IFE) and the Electoral Tribunal of the Judicial Branch of the Federation  (TRIFE).

While de facto equilibria existed that curbed the worst excesses, or at least rectified them after the fact, the PRIist political system was never characterized by checks and balances. The concept was unintelligible for a structure founded on centralization of power and the force of control and imposition. Had there been checks and balances, we might have observed a more seamless transition: as in Imperial Rome, the excesses of the system –from student repression to economic crises and corruption- became propitious elements of the collapse because there never were, as in XVII-century England, balancing factors that impeded abuse and excesses.

As of 2000, we entered into another stage of national development, in which we ended up in the worst of all worlds: without controls, without equilibria, and without checks and balances. Few nations have achieved a democratic transition without violent turmoil. It is impressive to look at the few that have accomplished this in a nearly imperceptible manner, but the contrary is more common: the old mechanisms of control, which, at any rate, allowed for some functionality, break down, but democratic checks and balances do not evolve. The difference between what there was formerly and what is not yet consolidated is vital, because as our current reality illustrates, there are many impediments to getting things done, but no mechanisms that oblige one to do things without falling into abuse, without extravagant expenditure, and with accountability. When there are no checks and balances, Congress can vote against the president, but the latter possesses no instruments to force Congress to act. Similarly, unions and state governors do not account for the quotas of their confreres and constituents, or for federal monetary transfers.

The absence of checks and balances preserves the status quo and paralyzes the country. Among the many proposals for changing this situation, few are constructive or visionary: instead, the petty and mercenary prevail. What is significant is that the actors in the political system recognize the existence of the problem, but have not known how to solve it. Instead of taking the bull by the horns, they have frequently resorted to the creation of autonomous entities(as if this were synonymous with impartiality or capacity to deliver) or to artificial solutions -imposed coalitions or majorities in congress- as if the capacity to govern could be legislated. What’s needed is a structure of checks and balances that makes it possible to govern while annulling the potential for proliferation of so-called “de facto powers”.

The key lies not in autonomy or an imposed majority, whatever the method, but rather, in the existence of checks and balances, and this can only arise from a great national-level debate resulting in negotiations on the structure of power.  And this, in turn, will only happen when all of the actors come to recognize that no one can function without the legitimate concurrence of the other. This may require another alternation of parties in government or a new crisis, but what is inexorable is that paralysis (and/or abuse) will persist until effective checks and balances are constructed. This is the reality of a society that has decentralized power and that nothing, except for an authoritarian regime, will change.

An effective system of checks and balances obliges everyone to cooperate because everyone knows that their functioning capacity depends on how everyone else functions. This is the basis of the political arrangement that Mexico must procure: one that responds to the most plebian and banal of human realities.Mancur Olson, an American scholar, wrote* that in nations with developed check and balance mechanisms, obstacles of economic growth are minimal, inasmuch as everyone would be affected by their very existence: in these cases, the most self-serving interest in the entire citizenry endeavors to eliminate restrictions to growth, because citizens lose out every time a bureaucrat or a private interest benefits from these restrictions. Everyone knows, says Olson, that prosperity tends to generate conditions for the development of democratic political systems; however, he notes, the opposite is equally so: democracy tends to favor prosperity.

Independently of the way in which an eventual political arrangement, its foundational element will be required to reside within the structuring of an effective checks and balances system. Although there are many models that can be studied, successful countries have constituted mechanisms appropriate to their circumstances: there are no prefabricated touchstones. Rather, the key lies in the negotiation itself: in the interaction among actors who suffer from and endure the absence of this type of mechanism, and of recognition by current beneficiaries that they themselves could, any day now, be on the other side of the table. Alternation creates opportunity, but only political accord can construct a lasting system.

Once this recognition is attained, creative solutions will begin to emerge that are appropriate for Mexican reality and that will shape the mechanisms of equilibrium for the federal powers as well as for governors. The important thing is not the form, but its functionality.

Building a country that works will require agreements that make possible the existence of checks and balances. For this, we may have to wait until the politicians are worn thin from the abuse of their opposite numbers. That’s the thing about development.

*Power and Prosperity: Outgrowing Communist and Capitalist Dictatorships

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David Lurie, the leading character in the novel Disgraceby CM Coetzee, appears to be devoted body and soul to courting disaster in his life, until he ends up fired from his job as professor and unhinged in his family life. In the face of his fall from grace, he concludes that, “when all else fails, philosophize”. I am tempted to do something like that when I think about a theme that has intrigued and concerned me for some time: the education-employment relationship that characterizes the country.

The problem is very simple: the behavior of the job market in Mexico is exactly the opposite of that in the U.S. and I ask myself why. Here, unemployment of university graduates is higher than the average, while the unemployment rate of persons with a secondary school education is lower. In the U.S. the opposite occurs: average unemployment there is 9%, but the number rises to 15% for those with a high school education or less, while it is 4.3% for those with a university degree.

The topic seems relevant to me for several reasons. Above all, whenever we talk about Mexican migrants to the U.S., we say that this is about a single labor market and that Mexicans who move to that country do so because there are employment opportunities, as witnessed by the empirical evidence (historically, unemployment is virtually zero among illegal immigrants). If it is only one labor market, why does the unemployment index behave so distinctly? A second issuerelates to the profile of university graduates. Why are there so many graduates from social sciences in general (including law, psychology, sociology and the like) with respect to those of engineering and the hard sciences? Finally, what do these factors tell us about the Mexican economy: is there something in the education-employment equation that permits us to better understand the nature of our economic challenges?

In Profesionistas en Vilo*/Professionals on Tenterhooks,Ricardo Estrada studies university enrolment in the country over time and analyzes how the student profile has changed and its relation to the labor market. Assuming the perspective of a student who aspires to become integrated into the job market, this author’s fundamental conclusion is that “the university degree has ceased being a passport to a stable and well-remunerated life” but that, “if the professional education is understood as an investment, the opportunities are as great or greater than before”.

Estrada proposes that part of the university graduates’ unemployment problem resides in that “the profile of the candidates is not attuned to that which employers are seeking… One main concern is that the bulk of professionals have studied majors with few job opportunities”. If this is the case, the question is, why have they majored in areas with little potential of finding employment? I have no answer, but one hypothesis is that majors that are considered “easy” tend to be compatible with simultaneous work/study situations: students opt for a major that allows them to work and study under the premise that the mere degree would enable them to obtain a better job. Another view of the same hypothesis would be that university scholarships have encouraged study to obtain an income (as if it were a job) and not because of a vocation. The “easy” major ends up being very attractive even if it does not lead to a good job. It is also possible that the teaching in secondary school of key subjects such as mathematics is so deficient that those aspiring to a degree in the end reconcile themselves to something that is not necessarily their vocation. The mismatch is evident.

On the side of the employers, two very contrasting worlds rapidly appear. In general terms, the most successful companies are those engaged inthe systematic raising of their productivity as a means of reducing costs and increasing profitability: they tend to contract the most qualified personnel, from whom they expect a clear contribution in order to continue increasing their productivity indices. It is here that we find concentration of the greater part of job offers for university graduates with credentials compatible with the demand for skills (which is the core of the book’s argument).

The perspective is very distinct in the remainder of the economy, whether among industrial or services enterprises. For companies not up against significant competition or that have achieved constructing protective barriers, there is no pressure to raise productivity, reduce costs, or be more competitive. These companies contract the personnel that they require, typically those with lower academic and skill levels: they don’t need more and are not willing to pay more than they need.

What we have is a bifurcated world in which two very distinct economies coexist: one that is exceedingly competitive, which requires the most qualified personnel and those with the best professional credentials; and the other, which has need of manual labor only. Although the former contributes much to the growth of the economy, the latter concentrates the greater number of employed persons. That is, as Macario Schettino says, the majority of Mexican workers are marginally productive; thus, they have low incomes. In the same manner, those that employ them add little value and, therefore, are marginally productive companies and contribute little to the development of the country.

Within this context, the political debate on the future of the economy is pathetic. The theoretical dilemma that we confront would imply choosing between the modern economy that grows but that employs a relatively low percentage of job seekers, or a decrepit economy of the past that today employs the greater number of people. Of course, this is a false dilemma but the surprising thing is the number of politicians who, in rhetoric and in practice, subscribe to the notion of staking their bets on the old and unproductive economy. To me it appears evident that the wager that the country must accept and assume is one for an economy that is modern, competitive, and disposed to generate more jobs, which are more and more productive and can pay higher salaries. The problem, of course, does not lie in that politicians and public officials are unable to understand the dilemma, but rather that their perception is that their own political costs of acting would be too high.

Wagering on a modern productive plant would entail eliminating obstacles to production in order to level the playing field for all of the companies, that is, to eliminate tariff, regulatory, and other types of mechanisms that, in fact, maintain an important part of our industry and of services providers isolated and protected from competition. Contrary to what many may suppose, protection does nothing more than perpetuate an unproductive world that translates into low salaries, uncertainty (for businesses and investors as well as for workers), and permanent havoc for the consumer. The true alternative is between a country that grows and develops and one that gives up the ghost little by little.

*Cidac, 2011

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The problem with bad ideas is that they spread as if they were good but, when those who promoted them become aware of their error, there is no alternative other than simulation and lies. This is the inevitable case of the 2007 electoral reforms. Now that the electoral season is formally in place and campaigns are taking off, the parties and their candidates begin to realize the enormous complexity that this legislation imposed and the practical consequences that it entails.

The electoral reform of 2007 upset the balances that had been achieved in 1996; it did not correct errors but rather altered the dynamic and the political equilibria inherent in this. From an observer’s perspective, it is easy simply to criticize or, as Will Rogers liked to say, “It’s easy to be a humorist, you have the whole government working for you“. The problem is that this is not comical. A bad idea can cause huge damage because it becomes dogma and, above all, because its promoters can’t recognize a mistake or confess to objectives or interests that are, well, unconfessable.

The electoral reform of 2007 began badly and ended worse. Instead of being posed as a part of a broader reform process, for correcting errors or fine-tuning the trajectory, there converged in the reform conflicting objectives, counterposed interests, and, more than anything, a vengeful spirit that is always a poor counselor. Worst of all was that every actor involved –the parties, many hyperactive legislators, the president, and the gallery of commentators- contributed to trashing a reform that could and should have advanced democratic processes.

Some wanted the reform to attack the president and his negative campaign strategy in 2006. All wanted to punish Fox. Other believed that, by conceding to all his criticisms, it would be possible to incorporate López-Obrador into the institutional thoroughfare. Some wanted revenge on the business community, above all for the advertisements that it sponsored. Still others believe that we dwell in Switzerland and that all that’s required for having a civilized polis is to put it into law.

While it is true that all legislations in the world, even the most controversial, end up being the product of a negotiation process (or, as Bismarck said, it’s better not to see the process of making laws or sausages because it’s the same), in the 2007 reform, the basest of passions won out and the result, inexorably, is hogwash. It’s enough to observe the way that parties and candidates attempt to adapt to these rules to prove this.

The least that can be said of the current electoral law is that it makes simulation and the lie obligatory (that’s the word). There are in particular two themes that consecrate it thus: one is that of money, and the other, that of propaganda. In contrast with other issues, money not moving by check moves in cash. I have not the least doubt that the luggage industry will be the big winner next year: it will be nauseating to observe an apparently altruistic idea become a simple and vulgar mechanism of cash-on-the-barrel pay-outs. Worse, the incentive for money laundering is infinite. With respect to propaganda and publicity, the candidates will have no option other than to procure indirect mechanisms (that is, means that do not directly involve them) to differentiate some from others. I understand the rationale of rejecting negative campaigns, but the restrictions that the law has imposed are so extreme and so absurd (and involve so many players, including the media) that the candidates will have no other alternative than to seek unsaintlyways to promote themselves, to criticize their adversaries, and to attempt to emerge without breaking the law but, nonetheless, achieving exactly what the law supposedly impedes. Another novel métier will be that of contortionism.

If the law obliges the candidates and parties to violate its spirit at all times, the law is denying every elemental right to the citizens. On following the spirit of the law, the citizen will have no way of knowing the candidates other than marginally and superficially; he/she will have insufficient knowledge for making an informed decision and will not be privy to what is the essence of democracy: a serious and responsible debate in which candidates put it on the line before the electorate. In just one night in 1994, one candidate grew and another collapsed as a consequence of debating. The citizenry became better informed and democracy advanced. That is impossible at present.

What we have today, what the law in force permits us to have, is cardboard-stiff monologues in which a candidate cannot even refer to what the other mentioned in an prior intervention;contests based on simulation where nothing is as it seems; and an interminable series of lies that become the baseline of who will govern us in upcoming years. In other words, the law rejects the notion that campaigns are a means to inform, to form opinion, and to convince the electorate. The law promotes a great Potemkin simulacrum in which nothing is real, everything is sham.

The law was in good measure a product of the unnerving atmosphere that produced the López-Obrador candidacy, the outrageous desafuero circus (the attempt to impede LópezObrador from running), and the bitter campaign of 2006. However, what may be criticized about our legislators is not their concern for responding to issues and grievances that did legitimately exist, but rather their pretention in inventing a non-existent country deriving from their biases, all of these encrusted in the law. What they achieved was a greater polarization, but above all an uncontrollable incentive toward simulation and to clearly illegal behaviors. Worse yet, the spirit of the law emboldened an entire generation of politicians who, in recent times, think it natural to attempt to penalize freedom of expression.

Beyond these costs there remain the perverse incentives that the law tosses into the mix. We are teaching children that it is imperative to violate the law in order to become elected; to the citizens we are saying that democracy is a politicians’, not a citizens’, affair; and we tell the contenders to do what they want or need to do to win but to do it “extramurally”. Such as bribes and corruption. That’s the legacy left to us by the law of 2007.

The sole commendable aspect of electoral legislation is the implicit aspiration of achieving an amiable and civilized political system. However, no matter how ridiculous our legislators’ commercials are, approval of a law does not modify the reality, at least not in Mexico. A civilized country is constructed every day in daily practice and in the institutional behavior of its actors, something in which our politicians lie far from excelling.

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The ideal of the Euro constituted an enormous challenge for many countries that have nothing to do with the European Union. After years of economic crises, political ups and downs, and inflation, many nations, above all those of Latin America, regarded with envy the golden opportunity that appeared to present itself to countries such as Greece and Italy: that of leaping forward in their development process without having to pay the costs. The Euro appeared to make the miracle of having German interest rates possible under the Mediterranean sun. Today we know that mirages are really costly: development does not come about by chance; rather, it requires great governmental capacity and the disposition to act. The same can be said for the adjustment politics currently in the palaestra of the discussion.

The Greek drama comprises many causes and components but a very evident one is that the strategy that it has adopted or, rather, that the circumstances and their neighbors have imposed upon them, do not tally with its internal reality, above all its capacity to govern itself. Were the Euro not to exist, Greece would be undergoing a very distinct situation, perhaps more similar to those characterizing many Latin-American nations at their times of crisis: a brutal fall that rendered fiscal adjustment, more than voluntary, inevitable. The Euro made the adjustment appear to be voluntary and few took it seriously. The reality is that, with the Euro or without this common currency, there are no short-cuts to prosperity.

The Mexican crises were very distinct: they ensued under similar circumstances (budget deficit, disequilibrium in the balance of payments) but their dynamic was entirely different. In the absence of dollars, the cost of everything imported, including the interests on the debt, went sky high and this led to the collapse of the economy. The dilemma was very simple: the government would organize the adjustment or this would take place under its own steam. A government with capacity of action can establish priorities and solicitude for certain programs; when crisis dominates the government, there is no priority at all: everything collapses. In 1995, the Mexican Government agreed, with the International Monetary Fund, to a zero deficit in the first year, that is, a brutal adjustment. Thanks to the Euro, the case of Greece has been very distinct, creating a political dynamic that makes it seem that the adjustment component of the scenario is something optional. Its commitment to the European Union and to the IMF includes arriving at a 10% deficit the first year: it might seem that Greece got off lightly because it can take it easy.

Each of the Mexican crises implied a brutal fall in economic activity (in 1995, contraction represented 8% of the GDP), but in a few months, the panorama began to improve: once the adjustment was carried out, exports began to grow and economic activity recovered swiftly. But the most important thing was not the economy’s performance, but rather, the evolution of the population’s expectations. Critics of the adjustment denounced the firings, the spending cuts, and the salary contraction, but within the lapse of a few months, the population proceeded from depression to a growing optimism. In contrast, the Greeks, whose adjustment is draconian and at the same time interminable, have now been in the throes of the process for a year and have no reason to think that things will improve in the foreseeable future. Paradoxically, the existence of the Euro, which in the good times offered so many advantages, is now a great liability.

At its time, on adopting the dollar as the reference currency (“convertibility”), Argentina attempted something similar to the Euro but this behaved exactly the same as that of Greece: it led to a disorderly economy and one without control, until reality caught up with it and the country found itself in a profound crisis from which it has yet to emerge. In Mexico and in other Latin-American nations, there were many debates on the adoption of the dollar as the legal tender and a Canadian proposed the idea of creating the “Amero” as the equivalent of the Euro on the American Continent. In retrospect, it appears that cautious government officials were right.

A country’s currency cannot be separated from its capacity to govern: it concerns, pardon the pun, two sides of the same coin. It is not coincidence that Ireland and, in second place, Spain, have recognized that there is no easy way out and, with great governing capacity, have weathered the adjustment with staidness and a sense of inevitability. On their part, now Greece has had to adopt German criteria for macroeconomic aggregates without the real governmental capacity that this entails in everything else.

The true dilemma resides in Germany. Eight years ago, the Germans and the French overran the deficits established by the Maastricht Treaty but no one dared to call them on it. Some have argued that this fact made countries currently in hot water feel that limits were irrelevant; thus, while the Germans devoted themselves to correcting their fiscal situation and raising their productivity levels in dramatic fashion, those to the South continued to enjoy life. Today it is these very Germans who find themselves up against the difficult tessitura of absorbing the losses of their profligate bedfellows in order to continue to possess the advantages of the Euro (and the ability to export with a not-too-expensive currency) or to abandon to Euro and assume the costs of a currency so hard that they would cease to be competitive in export markers. Highly priced, the fiscal virtues of the Germans…

The simple fact is that the Europeans have no easy outs, that they are presently confronting a complex banking and fiscal situation and, whatever the way out might be, it will require definitions that will be most disagreeable in Germany, where the electorate has neither the patience nor the tolerance for the easy life of the Greeks and the Italians. Instead of being able to do what would be desirable, the Germans are now faced with the need to act in a way that Galbraith once characterized as: “Politics is not the art of the possible. It consists of choosing between the disastrous and the unpalatable”. That’s what awaits the Germans.

At the end of the day, everything depends on the governmental capacity that a country has and this includes fiscal and monetary responsibility. Earl Long, a somewhat folkloric U.S. governor, once affirmed that, “someday Louisiana is gonna get good government. And they ain’t gonna like it”. Greece appears to be undergoing a like tessitura. Its tragedy is that there is no light at the end of the tunnel, a circumstance not true in countries like Ireland or Spain that, however formidable the road immediately ahead, the future is no less promising. The experts say that the real key factor is Italy because, different from Greece, its collapse could take all the others with it. In the words of the Chinese curse, may you live in interesting times.

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Aaron Copland, one of the great American composers of the past century, told the story of browsing in a bookshop one day, when he noticed a woman buying one of his books, “What To Listen for in Music”, together with a paperback edition of a Shakespearean play. As the customer left the shop, Copland stopped her and asked, “Would you like me to autograph your book?” Looking blankly into the composer’s beaming face, the woman asked, “Which one?” That’s seems to be the Americans’ plight these days: being unable even to identify the nature of their problems.

The U.S. dispute is concentrated on the immediate: controlling the fiscal deficit or increasing public spending in order to promote job creation. Advocates of the former say that without reestablishing the health of the economy, job creation would be ephemeral, while those espousing the latter insist that the risks of social breakdown are the only relevant criterion. Our experience in Mexico is clear: without fiscal equilibrium, everything else is irrelevant. However, the core problem  transcends the immediate disputes and the way the U.S. resolves them will exert an enormous impact on Mexico’s future.

For more than fifty years, the U.S. economy constituted the horse that pulled the world’s cart. Its economic strength and the manner in which they articulated incentives for growth comprised the pillar that yielded decades of creativity, scientific and technological development, and leadership in the world. It is not by chance that, as a superpower, the U.S. constituted the main promoter of globalization in economic as well as in the social and cultural fields.

Today, the Americans are confronting the costs of their enormous success. Their fiscal and employment problems reflect the transformation of the world economy: nations that assumed globalization as a strategy have achieved such success that they now compete with Americans for the most productive jobs. The problem was not serious while it was only a few Thais, Mexicans, or Koreans achieved productivity indices similar to those of the Americans at a fraction of the cost. The problem was uncorked with the weight of economies such as those of China and India that, due solely to their size, ended up unhinging the U.S. middle class.

Some years ago, Niall Ferguson coined the term “Chimerica” to explain the new phenomenon: the Americans developed science, technology, engineering and, in general, all of the services that are fundamental inputs (and that are those with greatest added value in economic activity), while the Chinese supplied the manpower. The joint effort appeared to be a winning formula. The problem is that American workers, who for decades had been the mainstay of their middle class, ended up being the biggest losers: inasmuch as manufacturing jobs evaporated (even as manufacturing output grew), their income stagnated or declined. Thanks to the deficiencies of their educational system, the majority of these persons had no abilities other than manual, those required by the great steel mills or automotive companies and that, little by little, were transferred to other localities (including Mexico). This situation was not evident for some years because, thanks to the availability of consumer credit and home equity loans, families maintained, in artificial fashion, their socioeconomic level and spending capacity. When the bubble burst, American society found that an important part of their population had no access to their current sources of wealth (high added value services): the remainder does not have the ability to incorporate themselves into successful activities or are not willing to try this. Their high unemployment levels are not the product of a transitory problem, but rather one of a fundamental structural sea change.

Globalization has favored nations that have assumed it integrally, allowing formerly poor countries to become wealthy and to multiply like mushrooms. Those that assumed the cost up front, as occurred with several Asiatic nations, became wealthy countries. Others, like Mexico, which have avoided paying these dues, have achieved very important advances in some sectors, but continue to experience the burdens of poverty and low productivity in the rest. The Americans are beginning to experience precisely this situation: they have leading sectors worldwide that place them in a privileged situation, while other activities, above all industrial, add less value and employ fewer and fewer people every day. In an open economy (in the sense of effective freedom to import) such as that of the U.S., unproductiveness is penalized without delay and this is what has led to so many workers having lost their work sources: why should a businessman pay a local employee $50 dollars an hour when a highly qualified engineer in Hungary costs $15 and another in India, $5.

The U.S. finds itself at a key tessitura. Historically, nations (and still more superpowers) that find themselves in the face of a crisis that combines unemployment, external competition, discouragement, and new powers in the offing have in the last analysis transformed themselves for the good or capitulated and become engrossed in consuming themselves from within. Examples of the former are Germany and Japan after World War II. But the case of Germany is also emblematic because of the way that it responded when confronted by unemployment and internal economic upset during the Weimar Republic after WW I.

In terms of the U.S., the option of transforming itself would implicate redefining the structure of its productive plant and revitalizing its exceptional inventive capacity and ingenuity to position itself again at the vanguard of development, now under other parameters. The revitalization of its exports in order to re-encounter a balance in its exterior checks and balances, above all with China, would be of utmost importance in this dimension. The alternative would consist of being consumed in sterile debates concerning the best way of preserving a structure that is unsustainable. As if arranging the chairs of the Titanic were more important than avoiding an iceberg.

What they end up doing will be crucial for Mexico. The first path offers exceptional opportunities in which we would be a key piece, a competitiveness factor in the region’s manufacturing renaissance. The alternative is terrifying for them, for us, and for the world. The good news is that U.S. history is rich in examples of transformation, but there is no certainty that, in an environment as tense and conflict-ridden as that which characterizes them today, they’ll be capable of achieving this. In the words of De Tocqueville: “The greatness of America lies in her ability to repair her faults”. The whole world is watching.

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