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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“The decisive step toward democracy”, says Prof. Adam Przeworski, “is the devolution of power from a group of people to a set of rules”. The rules and principles on which the functioning of Mexican democracy is based are many, but they have never achieved the supremacy that is the essential requisite for democracy. This does not imply that power continues to be concentrated in the presidency, but it does imply that in Mexico the transition toward democracy has not yet put into the anticipated port: power has been dispersed but not institutionalized.

The transitions toward democracy that began in Mediterranean Europe in the seventies created enormous expectations, in the populations of countries living under the authoritarian heel as well as among scholars and activists who dreamed of imitating it. Decades later Thomas Carothers* says that it is time to recognize that the paradigm of the inevitability of the transition of authoritarianism to democracy is false. Rather, he affirms, the majority of countries that terminated their authoritarian regimes and attempted the transition ended up mired along the way in what, in the best of cases, can be called an “ineffective” democracy, while others remained paralyzed in a gray area characterized by a party, a personage, or a bevy of political forces that dominate the system, impeding the advance of democracy.

Carothers’ thesis, not very distinct from that of the “illiberal” democracy of Zakaria, obliges us to position ourselves in a distinct scenario from that prevailing in the collective consciousness of Mexican society. Instead of supposing that we find ourselves in a process that will inexorably lead to democracy, the scholar’s mind-set is that we have arrived at a distinct state and that only by recognizing this reality will it be possible to rethink what comes next.

Countries living in this “gray zone” and whose political life is marked, according to Carothers, “by feckless pluralism tend to have significant amounts of political freedom, regular elections, and alternation of power between genuinely different political groupings. Despite these positive features, however, democracy remains shallow and troubled. Political participation, though broad at election time, extends little beyond voting. Political elites from all the major parties or groupings are widely perceived as corrupt, self-interested, and ineffective. The alternation of power seems only to trade the country’s problems back and forth from one hapless side to the other… The political competition is between deeply entrenched parties that essentially operate as patronage networks and seem never to renovate themselves”. Sound familiar?

Within a context such as this there is little advancement, reforms are quagmired, and there is an absolute incapacity to perform objective diagnosis, much less to debate practical, not ideological, solutions. The government is not privy to the operational instruments necessary and the demarcation line between the government and its party exhibits a tendency toward non-existence, leading the powers that be to manipulate political processes for their own benefit. With Russia as an example, the author states that instead of building on what already exists, each new government repudiates the legacy of its predecessor and embarks upon destroying the achievements of former governments as a safety mechanism for power. I thought he was talking about Mexico.

The conclusion arrived at by Carothers, which treats the theme in generic fashion, is that the “transition” label is not useful to characterize nations that were incapable of constructing the institutions necessary for operating an effective democracy. It is not that there are no democratic components or that the population has not benefitted from the political change inherent in open and competitive electoral processes, but rather that the distance between the party elites and the citizenry, as well as diverse privations, tend to tarnish democratic life, diminish its legitimacy, and drive alternative electoral proposals, including the appearance of “saviors” rallying behind a return to an idyllic past that, of course, never existed.

In this theme, we Mexicans tap into another of the schizophrenias that separate reality from fantasy. In its political discourse, Mexico is a democratic country that advances little by little toward development and plenty. The problem is that the implicit supposition that, despite the avatars, we are advancing toward democracy and development, obscures the nature of the problem that we are in fact living through. For some it does not matter where we are or how many changes are effected, so sure they are of our arrival at the safe haven of democracy. For others, those who cling to power or who benefit from its privileges, there is no expense involved in high-flown discourse that does nothing other than raise the notch of the system’s illegitimacy. As a whole, both perspectives have had the effect of serving as the aegis for political paralysis, and, in fact, for justification of the democratic regression that we are experiencing.

Mexican democracy emerged from a set of electoral reforms that gradually achieved conferral of legitimacy on the election mechanism of popular representatives and government officials. It never advanced in the terrain of the institutional transformation crucial for the consolidation of a nation of rules to which the powerful are subordinate. This contradiction has opened up opportunities for marking off democratic spaces but, much more importantly, for sustaining an order that is not authoritarian but that is also not democratic or, in Carothers’ words, an ineffective democracy.

Examples abound: the impeachment attempt in 2005; the quest for means of guaranteeing artificial majorities; the 2007 electoral law reforms with the growing limitations on freedom of expression that they entail. It’s not that the present situation is ideal, but instead that the manner in which the attempt to resolve its challenges is by curtailing citizen freedoms, protecting the parties, and consolidating a system where the citizenry serves the politicians and not the inverse.

The good news is that it is impossible to reconstruct the old system, however great the yearning of some PRI- and exPRIists. This is what Lech Walesa inferred when, with Poland already in the embrace of democracy, the former president was defeated by the Communist Party and he then affirmed that “making fish soup from an aquarium is not the same as making an aquarium from fish soup”. There can be considerable regression but the possibility of the restoration of the vertical power of the past is nil. The bad news is that an ineffective democracy does not expedite development.

*The End of the Paradigm Transition, Journal of Democracy, Vol. 13, No. 1, Jan 2002.

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One of my teachers, Roy Macridis, was fond of saying that public policy, in particular that which is relative to foreign policy, should be evaluated not for its objectives but for its consequences. The theme that especially grieved him was the Vietnam War, concerning which his pithy affirmation was that the United States had achieved exactly the opposite of what it had set out to accomplish.

Ten years ago, my concern was that the American response to the brutal attacks of 9/11 would bring about precisely the opposite of what was intended. It was obvious that the US government intended to reshape the Middle East’s geopolitical map, and in concept, its thrust was believable, at least at the outset. What was done, both in the region as well as inside the United States, changed the world, not all of it for the better.

In my essay written ten years ago, I ended with this paragraph:

The issue of response and retribution is as complex as the root causes of the conflict. The easy response is to attack in an indiscriminate fashion everything and everybody that looks like a terrorist or that fits some profile or country of origin. History is plagued with examples of perfectly innocent people ending giving up all hope after being ruthlessly tortured or attacked. The problem with liberal societies is that, in order to remain liberal, they have to act within the framework of the rule of law above and beyond the expedient use of authority of firepower. Power has its uses, and it must be employed when it is warranted and in a way that sustains the broader issue of sustaining the liberal democratic values. The battle against terrorism has to be won with the appropriate weapons, those that will produce a better place to live in. To paraphrase John Womack of Harvard: democracy does not produce, by itself, a decent way of living; rather, it is decent ways of living that make democracy possible.

An honest assessment today must conclude that the strategy adopted was successful in averting additional strikes but failed dramatically by upgrading the environment in which terrorism can flourish. To begin with, the United States is a very different country from what it was a decade ago. Security has become paramount and has infringed upon the space of liberty in ways that transcend the security needs. The greatest virtue that the world has historically associated with the United States—the freedom that the individual enjoys—has been eroded, while the tentacles of the security apparatus have firmly entrenched themselves.

As the victim, the United States squandered the extraordinary good will that the attacks had garnered for it. It is obvious that the United States had to respond, but in retrospect, its response was clearly not smart. The United States has lost out in terms of credibility and legitimacy, while it has seen the growth of a resurgent Russia, an emboldened Iran, a collapsing Afghanistan, and a less-than-perfect political arrangement in Iraq. Worse, while the United States has not been directly hit again, the terrorist threat has not abated. Furthermore, the hyperactive American presence in the Middle East has led it to neglect its role and responsibility as the world’s sole superpower.

Surely, as George Friedman has argued, “When you are overwhelmingly dominant, you don’t have to operate with a surgeon’s precision.”¹ But the United States has been disoriented, has confused unattainable objectives with long-term strategies, and now has to face the need to redefine its strategy toward the world. Observed from the outside, the United States remains a formidable power that has an ever-more imperial air to it, but that power is one that Americans at large appear very unwilling to assume. Friedman argues that “the overriding necessity for American policy in the decade to come is a return to the balanced, global strategy that the United States learned from the example of ancient Rome and from the Britain of a hundred years ago.”² Given the experience of the past decade, does that seem feasible?

Over the years, I have come to the conclusion that the 9/11 strike was possible not because US defenses were weak but because of a major failure of imagination. Simply put, nobody ever envisioned using planes as missiles. Things have changed, and the United States today is a hardened place, not very amenable to visitors and very aggressive vis-à-vis the rest of the world. These features would seem an ideal foundation for the development of a modern American empire.

Although the concept of empire seems inimical to the very idea of “Americanness,” the United States, ever since the collapse of the Soviet Union, has been trying to reshape the world order and has been moving, in a very un-American way, toward what everybody in the globe identifies as the behavior of an imperial power. No one has advanced such a notion in recent years as cogently as Friedman in his book The Next Decade. According to this author, the challenge for the United States in the decade ahead is

to conduct a ruthless, unsentimental foreign policy in a nation that still has unreasonable fantasies of being loved, or at least of being left alone. . . . An unsentimental foreign policy means that in the coming decade the president must identify with a clear and cold eye the most dangerous enemies, then create coalitions to manage it. This unsentimental approach means breaking free of the entire Cold War system of alliances and institutions, including NATO, the International Monetary Fund, and the United Nations.³

What would it mean for the rest of the world if the United States assumed the role of an empire along the lines proposed by Friedman? From the vantage point of a non-American, the question is somewhat odd. Latin Americans have long seen the United States as an empire, even if reality and perception do not always coincide. However, US intervention in places like Iraq and Afghanistan could hardly be perceived in any other light, much as the US-Mexican War in the nineteenth century or other small wars in the nineteenth and twentieth centuries showed.

A new approach to empire might mean more selective military actions, a more strategic approach to world problems, and different definitions for both allies and enemies. I would assume that, in such a scenario, the notion of concentrating so many resources on a single region or issue would change radically. This being said, some issues would not change at all: my country, Mexico, would continue to command the attention of US policymakers simply because it is so important to American security. Overall, however, I have no doubt that a more strategic focus on world problems, assuming that domestic politics were to make this possible, would better serve both the United States and the world.

My concern about any future US strategy is not about its power and capabilities. Those are obviously vast and face no real competition of any kind. My concern today is the same I wrote about ten years ago: what will the United States end up sacrificing in its imperial phase? Perhaps it was Benjamin Franklin who best articulated the concern of many of the Founding Fathers when he informed a woman that they had afforded the country “a republic, if you can keep it.” I wonder whether today’s US officials, those who have run down the economy, are capable of maintaining the republic, of differentiating what matters and what is fundamental from what is superfluous. The evidence from the last decade is not reassuring.

Foreigners have long seen the United States as a safe haven for the rule of law, for freedom of speech and movement, and for extraordinary effervescence and entrepreneurship. Will it remain as powerful a magnet and example during the upcoming decade? Many of the changes that the United States has experienced internally would appear to bode ill. The fact that many Americans dismiss these concerns should be a concern in itself. Negating the obvious does not change its reality. As Abraham Lincoln once said, “How many legs does a dog have if you call the tail a leg? Four. Calling a tail a leg doesn’t make it a leg.” The rest of humanity will be watching, hoping the United States will prove to be as capable at handling its foreign affairs as it is at preserving what makes it unique and exceptional. Or that it is capable of sustaining its majesty and exceptionality the way de Tocqueville conceived of it: “The greatness of America lies in her ability to repair her faults.”

Luis Rubio is chairman of CIDAC (Center of Research for Development), an independent research institution devoted to the study of economic and political policy issues. He is a prolific writer on political, economic, and international subjects. His latest book, on Mexico’s emeging middle class, will be published in December 2011 by the Woodrow Wilson Center for International Scholars.

In the guise of Sherlock Holmes, many Mexicans ask, where is the narco-capo of the Potomac? The fact that the narcotics market in the U.S is such an important and central factor in the flow of drugs through Mexican territory has led to the conclusion that the ways and means of narco functioning in both countries are the same. Thus the question, reasonable in appearance, of where is the kingpinthere?

This is a moot point that derives from a mutual lack of understanding on the nature of the phenomenon. In both societies we tend to project our perceptions and characteristics onto the other. In our case, the presumption that there are great and powerful capos in U.S. like those here leads to the conclusion that the Americans don’t want to stop them and, therefore, that they are cynical and hypocritical. On their part, Americans assume that all of Mexico’s problems are the product of the reigning corruption and that Mexico could stop the flow of drugs if it truly proposed to do so. The enormous recognition showered on President Calderón because of his decision to combat organized crime derives from this reading: here we have, at last, a person who indeed understands and is disposed to act.

As always, the reality is more complex than the caricatures suggest, but in this case, it’s not so much that it’s about two incompatible truths, but rather distinct manifestations of one same phenomenon. Just as in Mexico, in the U.S. there’s a duality: a huge number of persons in jail accused of drug-related crimes (more than 2 million) vis-à-vis evident disinterest in ending drug consumption.According to some calculations, the U.S. government spends seventy times more on publicity against tobacco than against illegal drugs.

With regard to the “great” capos, the reality could not be more contrasting: here in Mexico everything’s big: bureaucracy, unions, political parties, companies; there’s no reason to suppose that narcotraffickers would be something distinct. In the case of the U.S., no company there is as big as, in relative terms,as Pemex or Telmex are in Mexico. Nor are there immense unions or political parties. While in Mexico great organizations manage the movement of narcotics shipments, there the drugs are distributed by gangs that corrupt relatively minor public officials. That is, there are no grand kingpins but instead many decentralized groups. It’s not that one’s good and the other bad, but rather it’s about structures that reflect their own political, economic, and cultural realities.

The Americans’ complaint resides in that Mexicans allow drugs to flow and that if there weren’t corruption there wouldn’t be drugs. The Mexicans’ grievance is that drugs not only arrive at the border but that they are distributed there: that they cross the border because there’s also corruption on the other side. The former ignore the laws of demand and supply, the latter the strength of the institutions. Drugs cross the border because there are individuals who allow themselves to be corrupted and let the drugs go through: the difference is that there it is the persons, not the institutions and structures, that are corrupted. Here we have entire entities –local governments, police corporations, the judiciary- that are infiltrated. U.S. institutions are so strong that, despite the presence of rotten apples, the whole is not undermined; Mexico’s are so weak that the relevant comparison is akinto a house of cards: remove one card and the entire building comes down.

Cynicism there leads one to conclude that it’s the Mexicans, and not their consumers, who corrupt their police officers and judges; cynicism here leads us to conclude that our problem would disappear ifAmericans would eliminate drug consumption. Others argue that legalization would cause the problem to wither away and still others suppose that the narcos would give up if offered amnesty, as if this were about freedom fighters.

Mexico’s problem lies in the weakness of its institutions, above all judicial and police. How, I ask myself, could we presume to make narco-amnesty work with if we don’t have the judicial power to exact compliance with it? There is no doubt that, if all consumption and drug-related monies were to disappear, the corruption and killing capacity of the criminal organizations would diminish. However, without a fully functional judicial system and police structures, the problem of criminality would continue to exist. Once criminal organizations take hold, their business is crime, not drugs: drugs may be the most profitable business in the hierarchy of criminal values, but then there are extortion, abduction, and other lines of business that do not depend on U.S. drug consumption. The relevant point is that Mexico’s problem is internal.

The nostalgic ones affirm that in past times narcotrafficking was kept under control because, in one version, the PRIists were better rulers and because, in another, narcos were negotiated with. Although it is obvious that many governors, mayors, police officers, or regional army heads were corrupted over time, what really took place was that there was a strong government, with concentrated power and a great capacity to act that drew a very clear line in the sand: you better not go over that line or it’s curtains for you. In the last two decades, with the decentralization of power in Mexico and the growth of the country as a point of entry into the U.S. market, the capacity of the Mexican government to make this threat stick evaporated. The Mexican State has no alternative other than to strengthen itself because without this, it would be overwhelmed.

The recent events in Monterrey constitute a novel source of concern: some see this as the beginning of the end of criminal organizations, others as a new escalation. Time will tell what it was, but what’s certain is that it was not terrorism. Of course, the act caused terror, but it’s not about organizations that suddenly adopt political objectives, the essential characteristic of terrorism. If language itself frequently generates political crises (as the differences in perspective between Americans and Mexicans mentioned here illustrate), employing the term terrorism can propitiate an enormously grave crisis in the bilateral relationship (many in the U.S. would like to cancel out any relationship, beginning with the virtual closing of the border). The menace of organized crime is already sufficiently large for Mexicans to give the American Talibans a justification to appropriate the agenda.

www.cidac.org

The film Sarafina!, starring Whoopi Goldberg, takes place in the South Africa of the Apartheid. Whoopi plays a teacher who attempts to instill a sense of dignity and a spirit of freedom in some children who suffer from an impenetrable climate of discrimination. Although this was a remote and distant place, radically different from ours in history and characteristics, I left the movie theater profoundly upset: I remember having thought that if Mexico had colors as in that African nation, we would have to recognize that our country is not very distinct.

In Mexico the main problem perhaps is not racial discrimination or flagrant racism, but it is indeed that of classism. Nothing exemplifies this better that the recent altercation that could be observed on YouTube (the ladies of Polanco) when one lady shrieked “shitty deadbeat cop” at a police officer. In addition to the insult to the personification (at least in theory) of the authority, the terms employed and the tone of these reveals a whole way of understanding the world.

The episode encapsulates, in exceedingly unequivocal fashion, several of the problems that bar Mexico from prospering: disdain for authority; impunity; classism in our society, and the nonexistence of a police service that is relevant to, competent for our reality and circumstance.

Without doubt, one of our great ills is that of classism. I have here two examples that illustrate this clearly. The hotel and restaurant industry in the U.S. employs hundreds of thousands, if not millions, of Mexican migrants. Anyone who has observed the relationship between these Mexicans and their peers or bosses would attest to that the communication is respectful and conducted in the same terms as it is among Americans themselves. What’s interesting is how this changes when a Mexican arrives as a client of the establishment: the Mexican usually speaks to the Mexican worker in Spanish and in the familiar second-person “tú” mode of address, expecting that the migrant worker will answer him with the third-person “Usted”, the more formal pronoun. That is, the customer expects to be treated as somebody superior, i.e. as if he were in Mexico. Although the communication in the US is between peers, when we travel we carry along with us our cultural and classist-structured baggage and immediately reproduce it in another context.

I observed a more comical, but similarly revealing, case on one occasion on a beach abroad. A prominent Mexican businessman was enjoying the sun in a recliner when, suddenly, a severe electrical storm came up. Quickly, the police officer in charge of the place warned everyone who was swimming or sunbathing there to go to the adjacent building immediately. All the Americans ran without a peep. The Mexicans took it calmly but eventually did the proper thing. But the businessman refused to budge. The police officer approached him and, politely, asked him to get moving. Offended, the businessman responded in his best Harvard English: “me boss, you cat”. Of course, fortunately for the Mexican, the police officer understood absolutely nothing. However, the officer took him by the arm and without further ado, made him move. There was no doubt of the personification of authority. Nor was there any doubt of the nature of the expression of the businessman: they weren’t from the same class.

Contempt for authority is as old as, at least, the era of the Spanish Conquest. The old “I obey but I don’t comply” sums up our legacy, although, of course, this has nothing to do with the reality of an absolutely first-world police system in Spain. Raymundo Riva-Palacio says it best: “We despise the police. We aren’t afraid of them anymore, we challenge them. When that does not work, we bribe them. They are the weakest part of the institutions, the most fragile link in the chain of society, where their discredit is so great…”. And the mix could not be worse: incompetent police officers, with no proper instruction; a society that holds them in contempt and that recognizes no authority at all; and, to top it all off, a virtual caste system in which a police officer could never be acceptable because he is from an lower class. We’ve got to dance the dance with this situation because there’s no choice…

The old system worked because the vertical control structure kept the police and the society in separate compartments, while it managed crime according to a patrimonial criterion in which the sole relevant objective consisted of preserving the revolutionary mafia in power. This system died (something that took place, little by little, prior to the defeat of PRI in the presidency in 2000) because the society grew, it became more and more complex and diverse, to the point that central control became impossible, unsustainable. The opening, which materialized emblematically with the PRI defeat in the presidency, resolved, at least in part, the issue of electoral legitimacy, but left undefiled others of an institutional character that continue to haunt us. Regarding the question of classicism in our society, the opening opened a proverbial Pandora’s box.

The paradox is that, as the screaming ladies illustrate, those of the upper classes demand that the authority comply with its duty (presumably maintaining the social peace, impeding the existence of criminals, and protecting the citizenry) but mock those responsible for making these stick: the policemen on the corner (and how degrading it would be for them if their children were cops). Different from developed societies, in which there evidently is also economic inequality, in Mexico this manifests itself in the form of social inequality. The old system kept under wraps, or maintained in contention, our society’s classism. Now it has become irrepressible.

Public insecurity and violence counterpoises us directly in confrontation with inequality: if we are not willing to recognize the authority of a police officer or a soldier and if these assume that they are inferior due to ancestral cultural and social reasons, who will maintain the social peace? In other words: Why should a police officer protect the citizenry if they know that they are despised by it? At least hypothetically, it could be thought that many of the criminals who have joined organized crime do so because it liberates them from an ungrateful social structure that maintains them under the heel. It is easy to imagine a narco flaunting his also being a magnate, like those of the financial sector.

Reality has caught up with us one more time: because we have been incapable of transforming the economy and constructing a modern and stable political system, we continue living under the yoke of social inequality and classism that anchors us in a world that can’t give any more. Matthew Arnold, a XIX-century English poet, said that “a system founded on inequality is against nature and, in the long run, breaks down”. We are already there.

www.cidac.org

Some days ago, Jose Luis Reyna touched a sore spot when he differentiated between democratic from authoritarian regimes: “One difference between democracy and authoritarian systems is that the latter requires few institutions and scarce rules to govern; the leader in turn’s will is sufficient for him to impose his will, arbitrary or not, on the rest. In contrast, in a democratic regime, the rules tend to be followed, complied with, and respected. For this, institutions are needed that provide implementation for the agreements, the differences, and their consequences.” Under this parameter, Mexico continues to be, or conducts itself as, an authoritarian regime. Will a strong State be constructed instead of the “why me?” one that characterizes the entire society at present?

What’s critical in our reality is that the centralized and power hungry regime disappeared but the country did not enter into a stage of institutional development. The result has not been the flowering of a society avid for democratic participation (although there are incipient manifestations in that direction) but rather the dispersion of power and the vanishing of responsibility. We stopped having a functional government and the whole society –from the president to every last mayor, including legislators, businesspeople, and labor and social leaders- defend privileges and cushy jobs with a gigantic “why me?”. At least at the federal level, authority and the capacity of intimidation have waned but in all other ambits, the forms continue to be authoritarian. The worst of all worlds: problem-solving mechanisms no longer exist nor does the disposition to employ those of yore.

Fox inaugurated this “new” era with his famous “and why me? when one television network deployed a paramilitary group for a physical takeover of another network’s installations without the government lifting a finger. In recent months, we were able to observe how two TV networks, presumably competitors, agreed to close the doors to the telephone group, and the government, neither hide nor hair. Without greater conviction nor a show of responsibility, the president of the Federal Commission of Telecommunications (Cofetel) limited himself to affirming that his commission “does not possess the power” to act, as if we lived in a paradise of legality. The Sicilias of this world are there because there is no institutional capacity to respond or disposition of the authority to act. The formerly omnipotent government has become just another onlooker. From an authoritarian State we moved on to the “why me?” one.

The change observed in the squalid federal government has not taken place at the State level, where the governors, heirs to part of the power that was previously consolidated in the presidency, have become established as feudal lords of the manor with no need to be accountable to anybody (why me?). The governors not only corner the greater part of the public expenditures, but they also do this without the least federal or local scrutiny. One governor contracts debt after the election of his successor, the money disappears, and there is no earthly power that can call him to account. Another appoints his brother as his successor without even thinking about it. Some recent elections demonstrated that the time has gone by when a governor can leave his chauffer as his successor but, aside from the most extreme effronteries, what characterized the presidential power of yesteryear, is observed today at the local level in almost comical fashion, although there’s nothing funny about it. Freedom of expression, perhaps the only great change and attainment of the alternation of parties in government, is real in central Mexico, where the imperial force of the presidency used to be brutal; but this is not so in the majority of states, where the feudal lord and master in the semblance of the governor or the narco (or a fusion of both) has ended up imposing his law. The old regime died but the ability to govern disappeared.

When the State is weak, the risks are high. The narcos understood this and took advantage of the years of decomposition at the end of the PRI and the transition to establish themselves. A strong State would not have to be at war: it is at war because, due to its present feebleness, it had few options. The authoritarian State of the past imposed rules; a strong but non authoritarian State would have to impose these via the institutional route. Our challenge is this: to transform the State so that it will have the capacity to govern, institutionalize disputes, and be accountable: cent by cent.

As does any architectural project, the development of a new institutional structure requires a wide variety of ingredients: from plans and permits to construction workers and engineers. It is possible that much of this could have been obviated in 2000 in view of the window of opportunity created by the PRI defeat. However, this possibility died due to lack of vision, the lack of understanding of the exceptionality of the moment and, above all, to the absence of grandeur: unfortunately, Mexico did not have a Mandela to inaugurate the democratic era… This instant gone, what is required today is a visionary initiative that brings together all the parts that integrate Mexican society. What is paradoxical is that in 2000 it perhaps might have been possible to employ authoritarian means to construct a democratic system. Today both the process and the result will have to be democratic.

There are no recipes for these things. There are also no prefabricated plans of value. What Mexico requires is a grand pact which the entire society joins. In practical terms, this will imply, necessarily, a great coalition that unites with and integrates, first, the formally existing political forces. But today’s Mexico surely would no longer tolerate a pact of elites like that which characterized the Constitutional Convention of 1917. The huge construction undertaking that awaits the country will consist of building a scaffold in the form of concentric circles that, little by little, will attract and take aboard each and every component of Mexican society. The type of leadership that Mexico will have need of is one that convokes and admixes, one that makes “the why me?” impossible.

It’s easy to pin the blame on recent governments for not having done this. The true challenge is to construct something different: authoritarian mechanisms will have to be abandoned and dialogue, negotiation, and integration skills will have to be developed.

In the final years of the PRI regime, with the old system in decline and without legitimacy, the joke going around  was that the difference between an authoritarian and a democratic system was that in the former the rulers make fun of the citizens while in the democratic system the situation is the other way around. There is, without doubt, freedom to laugh at the politicians, but it’s worthless in the absence of a strong State and what that implies for the development of the country.

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The past several months have been exceedingly enlightening. To observe the manner in which Europeans have (half heartedly) conducted the Greek crisis or Americans writhing in anguish so as not to fall into default compelled me to reflect on our own financial crises of the past decades. The conclusion I arrived at is that we have a great export product that we not only have not yet understood, but whose transcendence we don’t even recognize.

Whatever their origins, fiscal crises acquire a dynamic that, sooner or later, no one can stop: governments manage and orchestrate them or end up overwhelmed by them. In nearly all cases, our crises originated externally: a large balance of payments disequilibrium, usually the product of excessive external borrowing, led to a devaluation that, on raising the Mexican peso value of the debt and of the associated interest, caused a crisis in the public accounts. Once the government’s income became insufficient for settling external commitments, the country was pressed to resort to creditors or to multilateral entities for financing its daily activities and, ultimately, to renegotiate the debt. Such negotiations always entail an adjustment of the economy to guarantee that the necessary volume of foreign currency will be generated to comply with respective pact. In Europe or the U.S., the origin of the crisis was distinct but the result is the same: an unsustainable imbalance.

The problem is that governments don’t always recognize that their options are limited. The case of López-Portillo in 1982 is paradigmatic: not only did he not recognize the necessity of acting decisively and immediately in the economic policy ambit, but also that his responses included political decisions (such as expropriation of the banks and exchange controls) that continue to hound us to date. Over time, and with the extraordinary experience that we appropriated in crisis management, the government learned to respond in immediate fashion and with enormous clarity of purpose. It learned that, under these circumstances, fiscal adjustment is inevitable and that it is much less costly to execute out immediately and in the least amount of time possible because this permits that, although the resulting recession be harsh, the economy begins to recover in a matter of months.

No recession is pleasant, but what we have been able to observe, in Greece as well as in the U.S., suggests that there has been much more wisdom among Mexican technocrats than we have come to recognize.

Although the circumstances are radically different, Greece and the U.S. are very similar in one dimension: in that their currencies are internationally recognized (both are reserve currencies), a factor that has allowed them to believe that they can maintain permanent fiscal imbalances at no cost. The case of the Greeks is particularly extreme because, for them, adjustment appears somewhat unnecessary as long as it’s the Germans who are paying. The case of the U.S. is pathetic because they have acted as if their power status is permanent and inalterable. Neither has come to realize that its objective situation is not distinct from those that we experienced in Mexico between the seventies and nineties and exactly for the same reason: spending like a drunk sailor money that they did not have.

The U.S. case is critical for us due to the fact that the only part of our economy that really works is that of exports, and these depend on the health of the economy of our neighbors. From our perspective, it is key that they return to the growth path. What isn’t obvious to me is that they are on the road to achieving this because they haven’t carried out any adjustment and, in their political process, they are conducting themselves in exactly the same fashion as we did in the seventies.

In very simplistic terms, the cleavage that exists in U.S. society with respect to the economic challenge is reduced to how important the debt and the fiscal deficit are for the economic future. For President Obama, what was important was to stimulate growth in order to, with greater economic activity, eventually reduce the deficit and pay off the debt. For the Republicans, above all for the Tea Party group, the fiscal stimulus approved in 2009 was a failure and had no effect other than raising the deficit and the debt. In the end, the agreement arrived at was perhaps the worst of all possible accords for both sides: President Obama ended up distanced himself from his Democratic base while the reduction in the deficit will be quite modest. That is, what’s probable is that there will not be a recovery in the short term or a solid base for a recovery down the road.

I am not an economist but I have experienced all of the crises that have affected Mexico from the seventies. What I have observed is what’s been most costly is denial, the pretension that nothing’s happening, that everything can be postponed, or that, as President Ruiz-Cortines would have said, problems resolve themselves or with time. It is evident that it is better for the economy to grow than to be paralyzed; however, if our experience demonstrates anything it is that sustainable recovery cannot be acquired with public finances in permanent disequilibrium. To pretend, as many Keynesians and many Democrats feign to do, that ceiling-less spending can continue on and that it is not necessary to address the long term liabilities of entitlements (pensions and health programs) is to live in denial. In view of its being the most important economy in the world, and key for us, this denial is extremely dangerous.

The political conflict that lies behind the U.S. fiscal disaccord is not essentially about the economy. While there is a part of U.S. society that sees in the government a solution to its problems (what in fiscal terms implies a tax hike), for a broad sector of that same society values of the first order reside in things like frugality and a smaller and less intrusive government. In an ideal world, the best, for them and for Mexico, would be for the Americans to resolve their differences with greater economic growth that would be accompanied by a systematic reduction of the deficit and the debt. Our experience suggests that this can only be attained with an adjustment at the beginning and not with wagering for success by the increased-spending route.

Our “export product” is evident: fiscal stability is the precondition for anything else. Most Mexican politicians learned as much the hard way. Maybe we could teach some of this to our lost neighbors.

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The true crisis of the U.S. Government is not fiscal, but political. The fiscal component is a mere symptom, a physical manifestation, of the dysfunctionality of what its political system has come to. The immediate trigger has been the legal requirement concerning the legislative power’s approval of the government’s debt limit, but the heart of the matter derives from a profound cleft that exists in the society regarding the government’s function in the society and in development. Perhaps most revealing of the nature of the problem is the fact that the two traditional political parties no longer represent society as a whole, rendering it ever more dependent on legislators of organized groups with very specific interests and narrow agendas.

There are many manifestations of the political process that our neighbors to the North are undergoing, beginning with the acute differences of perspective between the “Blues” and the “Reds”. If one scrutinizes the U.S. electoral map throughout the last ten or fifteen years, what’s evident is the electoral polarization that it has experienced and that has divided voters into Blues, or Democrats, and Reds, or Republicans. With minor exceptions, the Blues dominate the coasts while the Reds monopolize the entire remainder of the country. The colors do nothing more than evidence radically distinct forms of understanding life and expressing longings about the future. The Blues tend to hold Reds in disdain and qualify them as primitive and unrefined, while the Reds qualify the Blues as elitist and Europeanized. While a caricature, this constitutes a factual reflection of prevailing attitudes and perceptions.

In my academic activities, I visit many U.S. universities every year, some in mid-America, others on the coasts. All are first class in terms of the quality of their faculty members, academic excellence, number of Nobel prizes, and other means employed to compare universities. However, the contrast between some of these and others could not be greater. At a university in St. Louis, Missouri, for example, several professors arrive in pickups and more than one is a member in good standing of the National Rifle Association (NRA), that is, they belong to the organization that bands together those who lobby for the right to bear arms, and many of their political or social attitudes are exceedingly conservative. In places like Boston or New York, the scenario is precisely the contrary: professors’ cars of choice are hybrids and their social and political preferences are clearly liberal.

For some, the government’s function is to do the least possible, leaving opportunities for development to the individual and the market. For others, the government should guarantee a basic platform of services and rights that are, in their view, the essence of civilization. In one of the most highly disputed and controversial themes of recent years, the provision of health services, some want it to be the individual who makes the decision by acquiring health insurance, while others consider health care to be an elemental obligation of the State. The same type of differences exist in other matters: Social Security; defense spending; the right to possess arms; aid for poverty; international commerce; subsidies for companies and persons enduring the avatars of imports; illegal migration. On the Republican side, they think that the individual should decide how to spend their money; therefore, it’s better to have a low tax regime. On the other hand, the Democrats think that the government is there to promote equality in the society and that taxes are the way to defray its cost.

Irrevocably, these differences in perspective are reflected in the government’s budget in good measure because for decades everyone got what they wanted until the sum totals became unmanageable, that is, the fiscal crisis in which it now find itself embroiled. What are noteworthy are not the problems, but that the proposals for the solution of each of these are not even fathomable to the other side. In general terms, Democrats accept no cut in social programs, while Republicans accept no tax increase. The heart of the matter does not reside in the defense of these programmatic and ideological principles, but in negating the existence of the problem. Social programs, above all Medicare, for adults over 65, are very popular but have no sustainable financial source and their cost grows at enormous speed. For Democrats, the issue of financing is a mere and inconsequential trifle. The equivalent for Republicans is defense expenditure and the costs of its diverse military exploits. Neither recognizes the scale of the outlays or the evident alternatives: less spending or more income.

The Tea Party Movement (TEA, backronym for Taxed Enough Already…), arising to a great extent in reaction to President Obama’s fiscal stimulus project and universal health care plan, proposes a return to basics: cut back on everything superfluous for a return to a situation of fiscal health and control of the growth of the government’s tentacles in all ambits of life. Independently of the philosophy driving this, many of the delegates sponsored by the party sponsored and who today constitute the congressional majority, its practical implementation has been fundamentalistic: all or nothing. For his part, President Obama has been equally intransigent: no concession in his stellar programs and nothing without a tax increase. This is the underlying theme.

Beyond the personalities, perhaps the major practical problem is that the two traditional parties no longer represent more than 65% of the electorate (in comparison with in excess of 90% twenty years ago). This has led to no one wishing to assume high risks with regard to their re-election and to permanently fear the wrath of their sponsors. One acute (and cynical) observer in Washington says that the immediate political problem is very simple: to be re-elected, Obama requires the support of the Republicans and that would imply sacrificing his traditional base. It is no more and no less than politics as usual: first are the politicians’ personal interests, and the rest is the rest. Some day they will emerge from their political crisis because such is the nature of their pragmatism; but that does not change the trail of uncertainty and dysfunctionality that they are leaving in their wake.

What is astounding about Washington today is the disdain of its political class for the transcendence of the U.S. as a superpower. Practically no one cares about the consequences of its action (or inaction) on the dollar or on international trade, themes that are crucial for the rest of the world. Such may be the privileges of being a superpower, but it is not a good way to run an empire.

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Images never fail to impact. The relationship with the U.S. is perhaps, says Sidney Weintraub, the most atypical in the world, and the variety of components is preeminent and much richer, and more complex, than would appear.

In the district known as La Villita in Chicago’s lower west side, I came upon scenes that not only delight the eye, but give rise to mixed emotions. There, disparate cultures and extraordinary stories converge, as well as a bilateral relationship that official interchanges are frequently unable to visualize.

La Villita has everything: shops; images; passersby; restaurants; street hawkers; tamales; activists; children; panhandlers; popsicle vendors with carts imported from Puebla, and hundreds of faces of people absorbing a new (and often old) world. As in so many other corners of U.S. geography, what was previously a North American space became a Hispanic, predominantly Mexican, concentration. But what is impressive is the prosperity and enthusiasm observed in the faces of dozens of people who come to the place in swarms. It is impossible to know everyone’s story, but those of a small nucleus with whom I talked evoked a lifetime and the enormous possibilities, with all of the sacrifices these entailed, that the freedom of the world of the USA has offered them.

Lupita, the most communicative of the group with whom I talked, is originally from a town in the central Mexican state of Zacatecas, where she left her two children in the care of her parents. Like so many others, she was first employed as a hotel chambermaid. Eventually, she became the head of the hotel’s laundry, where she learned the ins and outs of the business. She obtained a loan to buy two washers and two dryers and set up her own laundromat. At the beginning, she only opened the laundromat nights after returning from work at the hotel, because someone had to be on duty all the time, and because though the washers and dryers never stopped, the income from the business was not sufficient for her to leave her day job or to pay an employee. Instead of capitulating to defeat, Lupita invented a novel enterprise: rather than only renting the washers and dryers to customers who operate the machines themselves, she introduced the services of washing and drying, folding, and ironing for those not desiring to do this, or who didn’t have time to go to the laundromat and wait for their clothes. Although the new service appropriated many of her sleep hours, in three months Lupita generated sufficient income to increase her credit line, purchase four additional washers and dryers, and leave her position at the hotel. Today, Lupita has three laundromats with eight employees in all. From farm worker to migrant to employee to entrepreneur, all in less than a decade. And more importantly: all without governmental support; struggling uphill; violating the law, and living in illegality.

Lupita is an uncommon woman, but hers is not an atypical case. Millions of Mexicans have achieved taking a step toward economic freedom, transforming their lives along the way. A man from Spain in Lupita’s group said that she has “more pride than Don Rodrigo de la horca”, an idiom in Spanish denoting the infrangible satisfaction of individuals who, even under the most adverse circumstances, get ahead on their own power. Observing this scenario, listening to Lupita’s remarkable story, I was left with the sensation that there are dynamics in the relationship between these two neighboring countries that are obvious in, though difficult to incorporate into, the formal interaction between governments and that result in profound lessons for us in Mexico and for the future of the bilateral relationship.

The lessons for Mexico would seem evident. Mainly, what is telling in the fact that a person with Lupita’s outstanding capacity and potential -and there are thousands of Lupitas in all of the country’s enclaves- who cannot develop themselves in Mexico, and for whom it has been Chicago where they found answers and opportunities. With all the adversities that confront a migrant, Lupita showed the world, but chiefly, herself, that the only thing required is a free space to develop one’s maximal potential. Lupita is surely no more than 35 years old, and it would not surprise me if when she’s 50, she’ll already have a chain of laundromats and will be selling franchises. The question is why she was unable to do this in Mexico.

Despite the restrictions inherent in the border and illegal access, the U.S. has become a blind control -a source of unimpeachable evidence- to our limitations, and most especially, to the stumbling blocks devised by our system of government to impede individual development. Lupita has no clout, no privileged entrée into the banking system, no friends in high places: her success is that of any American because the governmental system is designed to make it possible for the Lupitas of this world to be successful. The structure (snarl is a better term) of laws, regulations, ordinances, and authorities that provides norms for the life of the economy is so absurd that it has the effect of obstructing job creation, preventing the unleashing of what Keynes called “animal spirits”. In Mexico, everything is an obstacle, in that procedures are favored over results, and, more to the point, because everything is an interminable contention for power and access to corruption. Creating jobs and the well-being of the population are the least of it.

The Mexico-U.S. bilateral relationship is atypical because we find at the border distinct cultures, histories charged with symbolism, and very dissimilar levels of development. Mexicans have clamored for help for decades from the Americans due to the fact that there are two very distinguishable levels of development to be dealt with. The claim that asymmetry be part of the equation is ubiquitous and unremitting. However, the success of millions of migrants in the U.S. marketplace reveals that the asymmetry is not the product of a relationship of domination and dependence, but rather, of Mexico’s inability to create favorable conditions for development. It is clear that the differences cannot be obliterated overnight, but it is equally clear that a successful strategy of development in Mexico would allow us to breach the gap over the course of time.

Many countries worldwide covet the border that we regard with contempt. It is not that the U.S. is a paradise: the difference with us is that they have organized themselves in such a way that people’s development becomes possible and have created an atmosphere of freedom for the development of all in the nation’s economy. It is evident that we are the ones who must resolve our own economic and bureaucratic structure for the bilateral relationship to cease to be atypical but, above all, for this to serve the development of the country and its population.

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At the Guilin Tiger Zoo in China, one walks a few meters from the most fearsome animals in the world. Different from traditional zoos, in which the animals tend to be passive, at Guilin everything is designed for the animals to preserve, to the extent possible, their natural habitat. They are not fed, but rather, are kept in a space in which they single out, kill, and eat the animal they crave. One proceeds along the side of a moat that, at times, feels terribly narrow, to the extent that it appears that the tigers could jump over to the other side at any instant. The sensation of impotence and fear is impressive. This, exactly this, is what many Mexican feel when they observe the way the government, above all the immune bureaucracy that lives in a world of impunity, harasses and lies in wait for them in permanent fashion. The country has everything to be a rotund success, were it not for the bureaucracy strangling it

In the Eighties, when the country experienced one of its worst moments economically, disputes within the Cabinet and within the government were about how to confront the crisis. Some wanted more government, some less; some wanted to change the logic of the productive sector, others, to return to the way it had been twenty or thirty years prior. The country was adrift, but discussions were essentially conceptual in nature, philosophical. Within the context of this marasmus, many companies sought ways out of their own problems. Although many were highly indebted, there were many businesses devoted to finding ways out of the gridlock. The internal market was excessively depressed, but numerous entrepreneurs perceived extraordinary opportunities through exportation. However, the more they attempted this, something held them back from acting.

In reality, one of the central problems of the Mexican economy is precisely that, from the Sixties, the internal market ceased being sufficiently large for enterprises to manufacture competitive products. Exportation was a natural outlet. However, the entire regulatory structure was designed to control, and not to foster, the growth of production, and much less, that of productivity. Instead of expediting the course, there were permit requirements for everything; to import and to export. Even to invest.

Despite the crisis and the severe recession that the country was undergoing, the restrictions persisted. There was a company that manufactured stoves at a competitive price and quality. Nevertheless, the products had a defect that rendered them unviable for export: the enamel used for finishing the stoves was not heat-resistant. The enamel represented barely 10% of the value of the stove, but without this finishing, it remained outside of the export market. However much the company resorted to the bureaucracy for permission to import the suitable paint with the very foreign currency that the company itself would generate with its exports, the response was always no. In fact, negative responses were so great in number that, little by little, they ended up provoking advancement of the reformers in the Presidential Cabinet. Opposition to any change was so overwhelming (and absurd) that the opening that resulted was much greater than that which its own promoters had imagined as feasible at that moment.

The obstacles were enormous, but little by little the way was paved. Some themes were concerned with the then-operating Secretary of Commerce and Industrial Development (SECOFI), the lair of prohibitionist regulators. But the problems were not limited to permits. To obtain the Value-added tax (IVA) rebate to enable exporters to be competitive required an enormous effort by the Finance Secretary, ever suspicious of any possibility of success. However, in the end, the difficulties involved in the export of manufactured goods were resolved. Although the opening was not as wide-ranging as its critics suppose (because monopolies persist in services and sectors not obliged to compete because they are regulated), the reality is that Mexico became a manufacturing power and today we are a hyper-competitive country in various extraordinarily successful sectors.

The scenario of services at present is much like that which occurred with the manufacturers in the Eighties: everything conspires against exportation, everything is an obstacle. The opening of the Eighties was limited to goods and did not include services, an area in which some countries, particularly India, has achieved spectacular growth rates. In contrast with manufactured goods, services offer opportunities that are much vaster for an enormous number of Mexicans. While manufacturing is concentrated on ever more sophisticated enterprises, typically large (and their suppliers), services depend, in many cases, on no more than organized persons. That is, in the services ambiance, it would be possible to imagine new opportunities by small and medium businesses in which no monumental up-front investment monies are required. In services, there is a great opportunity for thousand or millions of potential new entrepreneurs.

The case of India is illustrative. In a few years, India has achieved the export of the most varied services, employing millions of Indians. Some include the call centers that all banks, credit card companies, and reservations systems utilize, but there are others that are more specialized: accountants; x-ray readers; administrative services, support for the installation and operating of appliances, computers, and other items. In India, a few lines of business employ millions of persons.

Mexico has two challenges to tackle. One is relatively simple, although this is not to say that the customs, fiscal, and employment, etc., bureaucracy will make it easy: to pave the way for the possibility of expanding the world of services for exportation, which will require changes in regulations and laws in order to generate in the end the necessary conditions of flexibility, above all fiscal and labor, which are anathema for the bureaucracy and those who benefit from the status quo. The remaining challenge consists of liberalizing and submitting to competition the services that already exist in the country and that comprise the themes that are avoided daily: telephone; energy; electricity, and, perhaps someday, the bureaucracy itself. If we want competitive services, it is necessary to generate an environment that allows them to be.

Manufacturing has demonstrated its potential. Now is the time to do the same with services.

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