Poverty is one of our worst blemishes and also one of our greatest mismatches. Beyond the quotidian polemics (similarly originating from political, ideological, or, simply, conceptual differences), I doubt that poverty is not a cause that all Mexicans would wish to defeat. In contrast with other controversial themes, in this one the differences do not lie in the objective, but rather in “the how”. Marcel Proust once wrote that “the journey to discovery is not in seeking new landscapes but in having new eyes”. With this focus, a group of Mexicans has come together to procure a novel route toward combating poverty.

In the struggle against poverty, there are many conflicting postures and many angles and perspectives to be found. A first discrepancy resides in the function of the government as cause and response: some perceive the solution as originating in public spending aimed at equalizing conditions and to conferring material opportunities on those who are poor. Although many agree –with more or less caveats- with this very simplistic diagnosis, the proposals to address the issue vary greatly: for example, the Solidaridad was a spending program by means of which the government constructed local leaderships and transferred funds to families, all with an inevitable client-oriented logic. In contrast, its successor program, Oportunidades, privileged the decision of families in the use of resources and eliminated all sources of dependence. The former program granted funds through the leadership, while the latter, from a suite of comparable, objective criteria. But in both cases, it involved the government employing public resources to modify the families’ material reality. In combination with improvement in the localities’ physical infrastructure (streets, electricity, water, drainage) and attention to education and health, these programs focused on reducing poverty by changing the environment and consumption potential of the target population.

The previous paragraph might suggest that there is agreement among scholars, activists, analysts, and public officials with respect to what to do. However, the contrary would be closer to the reality. The mismatches not only refer to how much to spend or to how to spend it, but to who should exercise control over the expenditure, and above all, what role corresponds to the authorities. In addition to the fight against poverty, Solidaridad had an evident political objective: that of creating mechanisms for the strengthening of local leadership that would contribute to stabilizing urban zones that, as the result of migration from the countryside, had created districts with a high degree of divisiveness and the potential for instability. That this leadership could in addition contribute votes was not of scant interest. On its part, Oportunidades was conceived of as a State policy that did not create opportunities to develop political clienteles, although, indubitably, its promoters entertained hopes that a decrease in poverty would translate into votes.

Neither of the two ways, in itself, is good or bad. What is paradoxical is that both were shored up on at least a meager realistic supposition. I refer to that of education. Solidaridad as well as Oportunidades mandated that the children of families who benefited from the programs would go to school, where the objective was to break the chain of poverty that implied that children from poor families continued to be poor because they did not develop the human capital necessary for incorporation into the formal economy. That is, reasonably enough, education was contemplated as a natural mechanism to break with the historic determinism of poverty. Unfortunately, it was never recognized that much of the educational system that we have is explicitly devoted to preserving poverty, dependence, and political control. Perhaps this explains, at least in part, how it is that programs as distinct (and even dissimilar) achieved raising the consumption levels of the most impecunious families of the country but did not do away with, or begin to do away with, poverty in the nation.

A recently published book affords a perspective that suggests that the main problem resides not only in the manner in which the public spending is exercised or who exercises it, but above all, in the way in which the individual participates in the process. In Breaking the Poverty Cycle: The Human Basis for Sustainable Development*, Susan Pick and Jenna Sirkin propose that it is not sufficient to resolve the context or the milieu within which poverty is generated and preserved, but rather, it is necessary for persons to take control of their lives and to be capable of making decisions that allow them to break with the vicious circle. The book narrates not only a technique, but also a history of decades of experience of a Mexican institution devoted to doing exactly that: to developing public policy programs designed to generate alternatives and to developing the capacity to make decisions in informed, autonomous, and responsible fashion. The programs that the book describes have advocated that people stop being the objective of poverty-fighting programs in order to become the agents of change that make the programs successful. The implicit proposal of the book consists of adding the dimension of individual choice to poverty-fighting programs that are not contemplated in traditional economic development theories or programs.

In other words, the authors, who launched their model by attacking other human development themes, found that the transformation of persons into agents of change, into individuals capable of talking charge of their lives, is not only possible, but that when this takes place within the context of the availability of resources, such as those comprising the central component of programs such as Solidaridad and Oportunidades, the potential of breaking with poverty multiplies dramatically. It is evident that, independently of the political or ideological perspective of the politician or party promoting a determined perspective for combating poverty, this objective requires vast public resources. What this book demonstrates is that success is not possible only with public resources, that it requires the modification of the context within which the individual functions: that is, it requires that the individuals themselves take charge of the programs. This clearly will not appeal to those who are aiming to develop electoral clienteles or to those who prefer statist solutions because they are just that, but it opens up an extraordinary opportunity for those who see in the citizenry –and in the development of a responsible and decided citizenry- the future of the country.

*Oxford University Press

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In one of his many memorable moments, on sitting down to play a game of dominoes, Cantinflas asked: “Are we going to play like gentlemen, or like what we are?” We have been playing for many years as what we are and not as gentlemen, that is, with rules of the game that always change. Without rules, without political agreement, there will be no reform worthy of the name. In a country in which the law is accepted solely to the extent to which it serves the interests of each person, group, or party, the point of departure must be that of agreeing on the rules of the game. Only in this manner can we aspire to obtain legislation or reform that might transcend the sheer vanity of its promoters. If there is something that proliferates, it is laws, but these do not modify the reality: they only complicate it. We have laws for everything, but their enforcement is always discretionary, therefore becoming a permanent source of arbitrariness; thence, of uncertainty.

It is evident that diverse reforms are urgent for the country. However, proceeding to approve them would constitute a futile exercise until and unless the point of departure is addressed: a political covenant to which all political actors are committed. This absence need not deter us from conducting a debate on the necessary reforms, but it does not guaranty any relevance either. In this spirit, the following are some of the conceptual themes that cry out for reform.

The first group refers to the functioning of the system of government. It is indispensable to redefine the government’s function, as well as to construct the checks and balances susceptible to making it work efficaciously. The first great theme that is necessary is to strengthen the presidency of the Republic. The presidency tended to be strong, but more because of its tie-in with the PRI than due to its Constitutional powers. Today, an institutional redefinition is required for the executive branch, as well as for its relationships with the other two branches. The three branches require equilibria in the form of checks and balances within a democratic context.

Next comes federalism. We went from a centralized system of control from the presidency to a libertine system –in politics and in the exercise of public spending- in which there are neither rules of play nor accountability. In this same regard, it is imperative to reconstruct public security, encroached upon during these years, precisely when the growth of narcotrafficking experienced runaway rhythms. The distinct levels of government must devote themselves to structuring an efficient system capable of restoring the safety of a population and of building the foundations of the Mexico of the future.

A second item is that of the economy. Just as in the political arena, there is an untold number of proposals for economic reform ranging from the fiscal to trade. If one accepts that it is essential to create an effective system of government, its equivalent within the economic milieu would be to create conditions for productivity to rise dramatically. This would imply three great approaches: first, integration of the national market; second, the creation of an environment that would make savings and investment propitious; and third, consolidation of public accounts. Each of these approaches is a world in itself, but the conceptual content of each is easy to elucidate.

Integration of a national market is what was not put into effect when the North American Free Trade Agreement (NAFTA) was set into motion, that is, the existing economic structure was preserved, leaving it to businesses or individuals with personal vision to exploit the perks of the new system. Creating a national market entails two processes: eliminating the barriers to access, and driving the transformation of the productive plant. The first would include conversion of the educational system into the platform for the development of social and human capital, elimination of the biases that create inequity, and creation of mechanisms that support restructuring companies that continue to function under the closed-market paradigm. In this same respect, effective rules are required to promote market competition, to submit the entire productive plant –including that of public enterprises- to competition, to eliminate mechanisms that protect the productive plant in order to favor a non-discriminatory environment, and to construct effective mechanisms in defense of consumer interest. The final objective would be to raise the general productivity of the Mexican economy. The fundamental means for achieving the latter would be to eliminate rent seeking, i.e., the tendency to prosper not because of productive capacity or innovation, but rather, as the result of political connections or regulatory barriers.

The creation of an environment that makes saving and investment propitious involves acting on all of the other fronts to create certainty, predictability, thus confidence, in the population. Although there are myriad specific actions and reforms that could be encapsulated under this section, in reality  this involves that resulting from actions on the previously mentioned fronts herein: effective checks and balances; effective government; equitable economic conditions; effective mechanisms for conflict resolution; continuity in governmental policies, and accountability. In the last analysis, all of the reforms undertaken must eventually create surroundings that are favorable for saving and investing, or they do not fulfill their mission.

Consolidating public accounts implies shoring up the government’s fiscal base, reducing its dependence on income from oil, and inspecting the spending structure of all government levels with the goal of achieving three central objectives: to eliminate the government’s fiscal vulnerability; to reduce superfluous, unnecessary, and electorally motivated expenditures (which leads to more spending than investment), and to distribute the fiscal burden, not only in fairer fashion, but also, for it to contribute to raising savings, investment, and productivity.

The great theme at present in Mexico is that of recognizing that the old system is no longer adequate for guiding the fate of the country, and that orchestration of this does not depend on persons themselves, but rather, on the strength of the institutions that they design, construct, and adopt. Recognizing the urgency of an institutional redefinition implies commencing with the latticework of political accords that are necessary so that a broad political-economic reform can be implemented. That is, the precondition for the series of reforms that are necessary is an accord among the political forces that recognizes the new realities and relations of power. Once this is resolved, legislation will consist of nothing other than putting it into writing.

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President George H.W. Bush’s adviser, the fearless southern political strategist Lee Atwater, once said to Dan Quayle, Bush’s vice-president at that time, “You were the best rabbit we ever had. Let them chase you and they’ll stay off the important things.” From the time that I read this anecdote some years ago, I kept thinking about whether it might be the same with the crime wave that we are living through today. Might it be that the violence is distracting us from the essential, from the factors that make peaceful coexistence possible in every community?

There have been several studies, arguments, and discussions that over recent months have begun to advance our understanding of the phenomenon. Beyond the specific arguments, what seems important to me is that the debate, above all that which has taken place in the pages of the periodical Nexos, but also in other forums, throughout the last two or three years, knowledge has truly advanced. The following is my own learning in this regard.

In the first place, it appears to me that there continues to be an enormous lack of understanding of the profound causes for the relatively sudden growth of criminality, without which it is impossible to turn back the current situation. For starters, I have no doubt concerning the confluence of two factors, more or less simultaneously but nonetheless independently, which produced the phenomenon. One factor was the decentralization of power that began to occur from the mid-nineties: perhaps the key year was 1994 when, at the apex of PRIist power, the first rash of abductions and killings was unleashed. There was insufficient power in the presidency to halt or prevent it. From this moment to the PRI defeat in 2000, power migrated to the states and municipalities without the latter having the most minimal understanding of its implications. From a system controlled –but not institutionalized- from above, ours proceeded to generalized decontrol. States and municipalities rejoiced in the inebriation of money and freedom that they began to enjoy, but did not invest this in public security, investigative capacity, or in an effective system for the procurement of justice.

While the fiesta was in full swing, the narco traffickers, and other criminal groups, began to grow in accelerated fashion. This growth was due to circumstances that, in retrospect, appear to be clear: a rising demand for pirated and stolen goods; the development of the consumer drug market in the country (small but mushrooming at exponential rates); the declining profitability from narco trafficking in the U.S., and the impact of 9/11 on the manner of introducing drugs into U.S. territory. Each of these factors generated a rapid ascent in criminal activity in Mexico. It is possible, although doubtful, that had this occurred during era of harsh PRI government of the old regime, strongly centralized and controlled, the system would have been able to impose rules and continue with its history of the administration of crime, as it always had. Truth to tell, everything suggests that the new phenomenon turned out to be infinitely more complex and powerful, in addition to that it transpired precisely when the political system was falling to pieces. The combination of these two factors could not have happened at a worse moment.

In analytical terms, it is important to determine whether the army caused more violence, or whether there were other factors. What is not in doubt is that the crucial factor in the rise of criminality and violence was not the army, but rather the disappearance of local government. As Ana Laura Magaloni and Antonio Azuela argue convincingly, strong or weak, local government achieved the maintenance of an equilibrium that controlled the criminality. It was not a perfect scheme of legality, but it fulfilled the most elementary function of government, which is to keep the peace. The sudden attack of organized crime and the brutal imbalances in the political power structure destroyed these equilibria. The presence of the federal government only dealt with the funeral rites. The problem was already there.

From this perspective, the way the action taken by the federal government can be one of “winning” or “losing” in front of the criminal mafias and its diagnosis can be correct or in error, but while local governments are not fortified, there will be no possible way out. That is, given the weakness of both the judicial and police institutions throughout the country, without decided action on the part of the federal government, it would be inconceivable to confront organized crime. However, to create a new platform of coexistence, social harmony, and control of criminality, there is no alternative to a strong local government endowed with the appropriate and relevant instruments for embattling crime at every corner. Neither of the two efforts is sufficient in itself, but without the second of the two, success is impossible.

The problem is that there never has been, at least since the Revolution, strong local government in the country. The old system was not created for there to be effective instances of state and municipal government, but instead, came into being to control the political groups and the population in general. That system never developed an institutional capacity that possessed even the slightest possibility of acting independently; in fact, its specialty was to sever the head of anyone attempting to do so. Observed in retrospect, this is the heart of the tragedy that we are smarting under at present.

Mexico requires answers and proposals that see through to the heart of the problem, and not its symptoms. That is why either the preferred solution of many PRIists (to return to centralization and control) or that of the pro-alliance actors (to exclude the PRI and to pretend that governance can be achieved without governmental structure and political ability) is simply absurd. Politicians of both stripes benefited from power decentralization, but neither of these assumed responsibility for its consequences.

What has worked in other countries, beginning with Colombia, is the combination of the following: strong local government and one that is duly outfitted in institutional terms; a police structure in which the population can trust; an integral economic development strategy which turns the local government into the heart of the economic flourishing and that generates employment having nothing to do with organized crime; and a concerted effort among the three governmental levels to fight against corruption. Evidence derived from Colombia suggests that without a frontal attack on corruption, the population will quite simply not believe that any advance has been achieved.

With all of the “what ifs” that one wishes to assign, the actions taken by the federal government and the army comprised a necessary response when faced by the risk of integral collapse of the government. But this effort cannot be the raison d’être of a government, nor is it sufficient. Lacking at present is what comes next and, it cannot be overstated, it would be better to begin now.

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“The more corrupt the state, the more it legislates.” Thus said Tacitus, Roman senator. In Mexico, the government is weak, weighty, ostentatious, and very noisy, but not at all effective although it, yes indeed, has an interminable proclivity for legislating. The evidence is everywhere: in the poor performance of the economy; the violence; the lack of punctuality; the insecurity; the traffic. Our representatives and senators promote themselves on the radio, issuing statements such as the following: “In the Senate of the Mexican Republic, we recognize that there is much criminality and so we legislate one thing or another,” as if legislating itself would resolve the problems.

In the last decades, we have gone from a heavy and abusive government, but one with some capacity (though waning) of action, to one that is simple heavy and useless. The government has a presence everywhere but that does not make it functional or effective. To the contrary: what the country urgently needs is a redefinition of the governmental function and the development of the capacities that would allow it to confront the monster of crime that stalks the population, to create conditions for getting the economy up and running and, in general, to improve coexistence in the society.

Here are three examples of the absurdity that characterizes us and that evidence how far we are from possessing an efficient system of government:

• In the fiscal ambit, governing is driven by circulars sent at any and all times. Ministry of Finance functionaries emit these for everything, never recognizing the uncertainty that their acts of authority generate. Stable surroundings comprise a necessary condition for economic development, and this is altered when the rules of the game change without prior notice, explanation, warning, or justification.

• Discretionary powers are an essential instrument of the governmental function: it is the means by which the authority adapts to the changing economic, electoral, or political environment. Given that it is impossible to anticipate or legislate on every possible contingency, governmental functioning would be impossible without discretionary powers. The problem is that, in Mexico, there is no difference between discretionary powers and arbitrariness: they are de facto synonyms because the authority employs its discretionary faculties with no restriction. That is what allows a governor to manipulate the elections in his state, or in any other; that the regulatory entities impose sanctions with no legal foundation; or that there can be thousands of deaths without a sole judicial inquiry. Authority in Mexico is absolutely arbitrary.

• In the case of the regulatory entities (Telecommunications, Competition, Energy, etc.), we have everything but clear rules. These entities make decisions based on the commissioners’ criteria, while the powers of their president in each of these are so vast that their personal preferences tend to prevail. The case of the Federal Competition Commission is paradigmatic because the theme is so central for our development:  laws come and laws go, but the only things that advance are the whims of those who define the priorities. It is evident that we require appropriate legislation, one that is comparable with those of the developed nations of the planet, but we also require a structure of authority with proper checks on their power, such as that existing in those countries. The theme is the same as in the rest: our problem is not one of laws, but rather one of the propensities for abuse of the powers of the authority, which situates them on a plane of permanent arbitrariness. Without limits, any authority becomes just another excuse for arbitrary decisions, the opposite of what a modern and institutionalized country requires.

To institutionalize implies limiting authority, that is, establishing rules that delineate and pre-establish the limits of its action. Discretionary powers are indispensable, but for governmental acting not to be arbitrary, it must be mapped out by rules known to all a priori.

Likewise, the dynamic history that has preceded us cannot be ignored. Thanks to the hyperinflation of the Weimar era, in Germany the Bundesbank is highly orthodox and focuses exclusively on combating inflation. The history of England is very distinct: memories of the poverty described by Dickens and inscribed on the collective conscience of that nation led to that, for the Bank of England, inflation may be important, but it should remain on a par with growth. Our history is not as extreme as that of these European nations, but the era of financial crises marked the country and became an essential definition of the financial function, the reason for which the central bank takes inflation control so seriously. In contrast with other governmental functions, this illustrates that there is a capacity for learning.

In the world there are many governmental models, each emanating from its own social reality. In France, the government possesses a very broad presence in the economy as owner and administrator of the most diverse of enterprises. In England, the government commands a much more modest presence. But both countries share a common characteristic: they have an effective and functional government. We debate and legislate a great deal about the nature of government, but we do not have a functional government. The old system was characterized by a government that worked under these circumstances but, as illustrated by the political and economic crises that have confronted the country since 1968, it left off being effective until it ended up practically in collapse.

At nearly two sexennial periods from the first alternation of parties in the presidency, it would be time to give form to a new system of government. This could be done in two ways: with a great restatement of its structures, or with a correction of some of its most dysfunctional parts. In a perfect world, it would be ideal to effect a grand redefinition, as the Spanish did in their Constitution of 1978. However, the Spanish example is not applicable because Spain had a functional government to begin with; what the Constitution did was to modify the relative weights of the distinct components of the State. We must start from the recognition that our system of government does not satisfy even the most basic of needs. Attempting to modify everything via the legislative pathway would not resolve the problem.

Electoral times are always propitious for discussion of the challenges facing us. Perhaps there is nothing more grave and pernicious than the disorder emanating from the disorder in the organization, structure and legitimacy of power in society. Everything derives from that: until limits to the politically powerful are not established and the powerful develop the capacity and vision to institutionalize that power, our governmental system will continue to be what it is: dysfunctional and ineffectual.

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Control or responsibility: That, as Hamlet would have said, is the question. But this is not a literary digression; rather, it is a central question of the nature of power, the responsibility of those of who govern, and their relationship with the citizenry. For some, the citizen is a mere peon in the social dynamic: for others, the citizen is the touchstone of this latticework. The difference is not small; thus, the profound controversy. What is at stake in the discussion concerning the modifications to Article 41 of the Mexican Constitution is precisely this: the leading role of the citizen in the development of the society.

The question is whether the citizen is just one of many components of democracy or its raison d’être. This dilemma defines it all. Some argue and defend the notion that the Mexican voter is a minor, unable to decide about the great affairs of our reality. Others, including myself, believe that these are complete citizens who have the right to drive the value of their perspective and to be at the center of decision-making on transcendental publics affairs. For the former, the function of the government and its institutions is to control, regulate, influence and shape the information so that the voter would know what is convenient and desirable for him. For the latter, the citizen is fully capable of deciding for herself and does not require the information to be filtered. Here lies the difference between a subject and a citizen.

According to Charles III, king of Spain in the XVIII Century, subjects are born to “to be silent and to obey and not to reflect nor opine about the high affairs of government”. Act II, it is imperative to filter –if not shape- the advertisements, commentaries, opinions, or criticisms that can arise from a very diverse society: little information, duly supervised. This is the perspective that inspired the 2007 electoral reforms in which society’s freedom to express their ideas, purchase media time, or receive information by means of publicity was curtailed. This reform raised the political parties, together with the Federal Electoral Institute (IFE), to the rank of the official and absolute controllers of the information that citizens should receive. Nothing other than what these entities produce, manipulate, or exert an influence over can be read, seen, or heard by the citizens.

Mark Twain, the great philosopher of life, had another idea: for him, “Citizenship is what makes a republic; monarchies can get away without it”. This is the tessitura that we have run up against: do we want a free citizenry that develops and that makes itself responsible for discerning and choosing among the postures that are presented to them, or do we want a set of voters who are incapable of anything except receiving instructions. I recognize that I am being absolute in this distinction, but I have no doubt that this involves a fundamental, even foundational, definition. The theme is whether we wager on a citizenry capable of discernment, or on an inert mass that only receives messages and acts according to the instructions implied therein.

This is not a lesser debate. Terms such as “controlling State”, “directed democracy”, and “strong government” were used throughout the PRIist era to legitimatize the abuse that the authoritarian system imposed on the citizenry, always considered as minors. During this era, the government was there to substitute for the supposed absence of an organized society, one capable of assuming itself to be the heart of the future. The current paradox is that the future is unviable without a strong citizenry. Restrictions such as those of the Reform of 2007 do nothing more than subjugate, submit, and control the citizenry. How is it possible for more transparency and account-rendering to exist if citizenship does not? Unless the objective comprises making up a group of experts (most assuredly integrated by those who support this vision) to conduct surveillance over the information and judge for the citizens, a democracy without citizens is not conceivable. The pretense that it is sufficient for the political parties to participate in the election and for citizens to be mere spectators says it all.
Stalin once affirmed that the persons who deposit their vote in the urn do not decide anything: those who decide, stated the Soviet dictator, are those who count the votes. The reconfiguration of the IFE at the mid-nineties attempted to respond to a quasi-Stalinist reality: the supposed Mexican democracy did not allow for certainty in the counting of votes. With the citizen IFE, Mexican democracy began to flourish in the electoral terrain. The IFE achieved what had appeared impossible: winning the trust of the electorate. But Mexican democracy was not designed for the citizenry. In present-day Mexican politics, sovereignty lies in the political parties. Citizen disillusionment has to do with this fact: the monopoly of power in the hands of the political parties and the corruption inherent in the control that they exercise. The average citizen may not have deep knowledge, but they understand perfectly that the vote is theirs and that it should be exercised with responsibility. Attempting to mold the information impedes this from occurring.

The 2007 Reform would have made Stalin proud. The autonomy of the IFE was left behind, along with public discussion, and electoral propaganda and opinion regarding the election were severely restricted. From once being an independent referee, the IFE was relegated to an auditing role. Heretofore the IFE’s concerns would not be concentrated on the equity of the election, but instead, on the content of political messages, the duration of spots, and the imposition of fines and admonishments on a growing number of actors. In another Stalinist fit of pique, everyone could be subject to an electoral crime. It was a new way of recentralizing power, not under the presidential yoke, but under that of the political parties and their administrators. This could be anything, but democracy it is not.

The dilemma is very simple: do we want a society structured and controlled by the political parties, or do we want a strong citizenry that is capable of demanding accountability and deciding on who would govern it. For some, the dilemma is equivalent to choosing a car in a dealership, but in reality it is about a fundamental difference: coming as we do from an authoritarian system, we require the entire force of the citizenry to discern without conferring so much power on the political parties. The parties are key entities in a democracy, but no substitute for a strong citizenry, capable of exercising the vote in serious, responsible, and informed fashion. Restrictions to freedom of expression are noxious to a citizenry that is alive and desirous of growing and transcending.

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“You have been sitting there too long for any good you have been doing,” Oliver Cromwell, the British Republican who defeated the throne, told the nobility. The same could be said for many businessmen and their respective chambers who cannot see further than their particular and immediate interest, even if that is entirely legitimate.  The rationale of our public servants and legislators must be the opposite: throw open spaces to the citizenry and the consumers.

The country finds itself in the throes of a complex bind in economic matters.  If we wish to view the glass as half empty, all sorts of problems, difficulties, and wrongs can be found that impede the optimal functioning of things.  However, there is also an alternative vision: if we are disposed to seeing the opportunities and possibilities, all we have to do it start making them possible.

With the excuse that things are not perfect, one part of the industrial sector has specialized in placing obstacles along the path of trade liberalization. This is an impossible way to proceed. If we desire the predictability of a Swiss timepiece, we will have to accept Switzerland’s rules of the game and its discipline. As long as we are not Switzerland, we will have to change things little by little, and be willing to pay the necessary price.

The issue of the day is trade negotiations with other countries. There are negotiations to deepen existing trade arrangements with  Colombia, of free trade with Peru and, still in the fledgling stage, ambitious treaties with Brazil and Korea. Many ask, some insistently, what the reason is for negotiating additional treaties if the internal problems are not resolved first. Those who think this way have an exceedingly valid point, but one that is not justifiable. Were we to have to wait until everything were resolved, the dream of the just would slip away before we can start moving towards development. Trade liberalization is a necessary means.

Unfortunately, the debate over commercial liberalization and free trade negotiations has been very poorly focused. From the beginning of liberalization in the mid-eighties, permanent confusion has reigned concerning the objectives to pursue and the role and function that corresponds to the economic agents and to the government, respectively. It is absolutely logical and legitimate for businesses to defend their interest and for them to pressure the authorities and legislators for their positions to be heard. But the function of the government is not to watch over these interests, but rather, those of the collective, that is, those of consumers and citizens in general. Even then, it is evident that in recent negotiations with Colombia, the modified treaty with which awaits Senate ratification, the interests and concerns of producers were incorporated.

Trade liberalization, which started in 1985 with the elimination of import permits and their substitution by duties, and in the free trade treaties that followed, it represented a fundamental sea change in the logic of economic development. Until the eighties, the entire emphasis had centered on protection, promotion, and subsidy of the producers. This scheme functioned well between the end of the thirties and the middle of the seventies, but ended in stagnation. Liberalization came about for a very simple reason: because domestic investment was no longer sufficient to generate high rates of economic growth and benefits in terms of the wealth and employment deriving from these.

The rationale of trade opening revolves around the consumer, whether a person or an enterprise. The objective is to force the productive plant to become competitive, to raise productivity levels, and to offer the consumer the best quality and market price, all by means of the competition that imports represent. Of course, the swing in strategy implied affectation of many businesses, but, for example, today the percentage of their income that Mexican families devote to clothing or shoes is a fraction of what it represented thirty years ago, and the quality is much better. That is, Mexican families have improved their level of living thanks to trade liberalization. What is better: millions of families with lower costs or a privileged company that enjoys the monopoly of high prices for these same families? Liberalization has transformed the lives of millions of Mexicans and has allowed the middle class of the country to grow. This should be the objective over which our Senators keep watch.

It doesn’t take a genius to argue that the opening has been unequal, that it has not included all of the sectors, that services continue to be expensive and inefficient, and that some producers have suffered because of competition. The truth, simple and straightforward, is that we have not dared to pursue the logic of the liberalization and deregulation to other indispensable ambits, such as the bureaucratic, the political, the monopolies, and that of privileges. But these are arguments for even more opening, not for preserving the ludicrous circumstances that characterize us.

The alternative for the future is very simple: we delve deeper and advance for the sake of achieving competitive producers and satisfied consumers, or we withdraw into our shell as we have to date and pretend that things will resolve themselves. If we enter into the logic of protecting a little thing here and there, we will end up with a collapsed economy. We must continue forward or we will go backward.

If one observes import and export patterns, the concentration that we have with the U.S. is evident, which leads many to conclude that we should not persevere liberalization. There are two reasons for thinking differently: first, each treaty that is signed implies greater benefits for the consumer, more competitive producers, and what economists refer to as “disciplines,” that is, well defined, trustworthy and predictable rules of the game for all, which are key for development in the long term.

The other reason for thinking distinctly is that the concentration of commerce, although explainable in geographic terms, entertains no logic. The concentration exists essentially because we the rules of origin that characterize the North American Free Trade Agreement (NAFTA), which make us highly competitive in that region, take away competitiveness outside of it. The solution to this does not lie in closing other doors, but instead, in attracting the production of inputs for competing successfully with all. That is, it is urgent for us to develop a world-class supplier industry. More treaties and greater liberalization are necessary conditions for this to develop.

There are solutions to the problems of the country, but only if we are willing to take the necessary steps. In matters of trade liberalization, it is imperative to privilege the interest of the consumer because the alternative is to remain stagnated. As simple as that.

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In his essay on the origin and significance of America, Alfonso Reyes writes that “Before being this firm reality, which at times enthuses us and at others makes us uneasy, America was the invention of poets, the charade of geographers, the hearsay of adventurers, the greed of enterprises, and, in sum, an inexplicable appetite and impulse for transcending the limits”. Over the past several decades, Mexico lost the ability to transcend limits and to construct a solid base for growth. However, truth to tell, efforts have not been, nor were they, few to erect the foundations of sustained growth. But at any rate, these never materialized.

Explanations of the phenomenon abound, some interested, others the product of more serious and profound analysis. Many industrialists attribute it to what they call contraband, while others, to the inequality of conditions confronting enterprises with respect to other markets. From the Left, the basic criticism clings to the government’s supposed abandonment of its function as promoter of development, essentially through spending and public investment. Microeconomics scholars touch upon specific market-access and competition problems in general, as well as with the low levels of productivity growth. The federal government studied the World Bank’s scoring methodology and addressed specific issues to improve Mexico’s grade in the “ease of doing business” category. Each of these perspectives contributes to explaining the nature of obstacles to growth but, after decades of mediocre performance, perhaps it is time to rethink the entire approach or, as Alfonso Reyes would say, to reanimate the appetite and impulse for transcending limits.

The environment that characterizes the public debate tends to be too ideological to allow for a healthy discussion regarding the nature of the problem. In fact, the discussion is frequently so absurd that there is not even agreement on when the problem began. If one abides by the numbers, it appears evident that the problem of growth emerged in the mid-sixties when, for the first time, the country ceased to have surplus corn for export which, together with other raw materials and grains, had been a fundamental source of financing for importing machinery, equipment, or supplies for industry. That moment triggered the debate on the opening of the economy: the very same debate that would be won by those who championed statist solutions that, underwritten as they were with debt and oil exports, dominated the panorama during the seventies. Later would come the reforms of the eighties and nineties that, although weighty in many respects, never fully reverted the “deeds” consummated throughout the seventies into the form of regulations, government-owned enterprises, and other subsidy, protection, and control mechanisms.

After more than four decades of unexceptional economic performance, it seems to me that the focus should change radically: rather than pursuing ways for the government to PRODUCE a sustained economic recovery, it is time that the government MAKES POSSIBLE the recovery. Although this appears to be a mere play on words, the focus is radically distinct: in the first case, the government assumes the responsibility of growth making use of the expenditure, investment, regulations, state-owned ventures, and other instruments within its reach. That is, everything that has not worked in 45 years. The alternative would be for the government to create conditions under which growth would be possible. Although many of the instruments would be the same, the manner of deploying them would be very different: instead of protecting some and favoring others, the government would create general rules, the same for all; instead of indulging the producer, it would launch a decided defense of the consumer; rather than changing the rules and regulations at every turn, it would create a permanent regulatory framework that is shored up on solid property rights; rather than making exceptions for government-owned corporations such as PEMEX, these would be required to respond to the consumer and to competition like any other company, independently of the nature of the ownership. The governmental focus of recent decades creates an ambience of uncertainty that discourages investment, savings, and production.

Some months ago, Gordon Hanson published a study* on why Mexico is not a rich country. His point of departure is that the country has carried out many reforms and that, in general, these are much more extensive than those of the majority of countries at a similar level of development but, unlike these, it has not achieved a rise in its growth rate. His analysis is also interesting because it excludes many of the clichés and myths that persist in the milieu: Corruption? Yes, but many countries that do grow are equally corrupt; Hispanic heritage? Yes, but, with the exception of Venezuela, Mexico is the country with the least growth in the region; Government-owned firms? Yes, but there are many in Asia and Latin America and these enterprises do not have to be an impediment; Cultural rejection? Perhaps, but not at all distinct from that of the remainder of the continent that grows with celerity. Hanson’s conclusion is interesting because it does not pretend to attain the philosophers’ stone. From his point of view, there are five factors that interact negatively to impede the growth of productivity, but it is very difficult to know the relative importance of each, which is why there is the risk of overestimating a specific cause only to later find that the problem lay elsewhere. The factors are the following: extremely poor allocation of credit; high incentives for the informal sector; a poor educational system; control of some key markets; and vulnerability to external shocks. However, the core of his conclusion is that there is no governmental capacity, that is, that the government is barely effective, that it generates too many distortions, and that it does not contribute to resolving the problems of the economy despite having attempted to so with such diligence.

Mexico has endeavored for decades to set economic growth aright. Along the way, solutions were tested that plainly did not achieve it, but a deep-seated wake of uncertainty has been created. The only lesson that is clear to me is that a strong government is required with a great capacity of action to render market functioning possible. Today we know that we have a weak system of government that has done its best to attempt to regulate, if not substitute for, the functioning of markets. Perhaps it’s high time to make possible for these to work.

*Hanson, Gordon, Why Isn’t Mexico Rich? NBER

http://www.nber.org/papers/w16470

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“In the struggle for survival”, said Charles Darwin, “the fittest win out at the expense of their rivals because they succeed in adapting themselves best to their environment”. The Mexican government appears to be emerging from a battle for survival, and we Mexicans, commencing with our politicians and pre-candidates, we seem to be indifferent to the predicament. Little is being done to construct the framework that will allow for a “new” Mexican state, a new system of government, appropriate for today’s conditions, which are very distinct from those of yesteryear. According to Darwin, the Mexican government is struggling for its survival, but it will not win if it does not erect the structures necessary to be able to win.

The most direct and visible battle, but not the only one, is that which the government is waging with narco traffickers. With the latter, there are bullets, violence, and many deaths. But the objective pursued by the government is less clear, because it has been changing. It is also not obvious because there is so little emphasis on the reconstruction of authority at the municipal level as the fundamental bastion. Instead of redefining the strategy for adjusting itself to the changing circumstances, the government has been redefining the objective. At the beginning, this appeared to be to eradicate the drug market, later to recover the territories that the narco traffickers had appropriated, and now everything seems to be concentrated on arresting or killing the heads of the distinct mafias. In contrast with what happens here, strong governments possess instruments to act and the capacity of mobilization and they do not aspire to anything other than a very specific thing: to establish rules for the narco in such a way that any infraction will be penalized instantly and explosively. This is how the Spanish and U.S. governments work: it is not that drugs or narco traffickers are absent from their territories; rather, the difference lies in that that these individuals know that any violation of the implicit rules of the game (such as killing a police officer or provoking mass murder) would imply a brutal and crushing response.

The Mexican government does not act like this because it does not have the capacity to do so; thus it is that it is found fighting a struggle for its survival. In Spain and the U.S., the local governments are the first line of defense, and state forces are only resorted to when things get out of control. The federal police participate in extreme circumstances only and the Army, practically never. Our problem is that, in nearly the entire country, there are no capacities at the municipal, nor at state or federal, levels; therefore, the Army ends up being the first line of defense. What this tells us is that our problem is not one of narco trafficking or of criminality, but instead, one of the absence of State. This is the underlying theme.

The deficit of the government with which we are afflicted originates in the nature of the PRIist system, but also in the manner in which it was dismantled. The PRIist system achieved its strength through the weight of the government and by its capacity to control everything from the center, and, based on that, by imposing an iron hand. The discipline kept the politicians, the opposition parties, the population in general, and even the delinquents and criminals in line. All of this was accomplished by means of unusually intelligent exercise of power, but not thanks to the existence of strong institutions that made it effective.

In the judiciary ambit, to cite an evident case, the government has never constructed a professional police force or an independent district attorney. Justice was administered with political criteria, and discretionary exercise of power, that is, arbitrariness, was its calling card.  What made the system work was the enormous control apparatus that, violating all respect for the rights of the citizenry, allowed for the administration of criminality. But that was before, within an environment of extreme power concentration, when the population was one half the size that it is at present and when access to means of communication and information that are everywhere today did not exist. In the PRIist system, there was no recognition of the fact that the fear that led to the discipline and respect for authority were an anthithesis, not synonymous: the people were afraid of the government but they did not respect it. For this reason, the pretension of many PRIists regarding the system’s being able to be revitalized or reconstructed is simply ridiculous.

The security crisis that we are experiencing did not start with the defeat of the PRI in 2000. It grew as the country grew, began to open up and decentralized despite the PRI. Let us not forget that one of the worst years for the system took place in 1994, precisely at the moment of the greatest concentration of power. The security crisis has diverse origins, but its explosion is directly correlated with the inexistence of a functional (and legitimate) government system capable of organizing and imposing itself.

The PRI’s defeat had the effect of accelerating governmental decomposition. Though debilitated, the capacity of the PRIist control system was maintained to the end; however, in as much as the power began to migrate toward the states, municipalities, political parties, and power groups (which from that moment on were to be called the “de facto powers”), the control system collapsed and, with it, every discipline-generating instrument. Unfortunately, practically none of the states or municipalities recognized the phenomenon: in an almost sudden manner, these levels of government became the first line of defense against a rising criminality that, due to years of carelessness, had not been confronted. Thus, from the end of the nineties but, above all, from 2000, the country was inundated in a sea of criminality from which today, eleven years later, there is as yet no way out.

In an ideal world, what would proceed would be to develop government capacity at the local, state, and federal levels. In the real world, there has been some advancement, modest, at the federal and nearly none at the state and municipal levels. In matters of security, the municipal level in Mexico has practically disappeared, and the lines of the state governments are blurred; the persistence of the state governors’ control with respect to the municipalities does not help. In our most decentralized world of today and within an environment of ubiquitous information, it appears clear that only a refocusing of the governmental function at state and municipal levels would permit beginning the reconstruction of the government and, with that, the establishment of limits for the bands of narcos and criminals. The way out does not rest on the reconstruction of an exacerbated federal government, something impossible at present, but rather on the construction of a true State. Nothing less.

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Why improve if one can keep on being the same?  Why change if all is well? The natural tendency, perhaps the easiest, is to stay where we are, reject any change, and pretend that we are fine. As in the Middle Ages, our businesspeople take shelter behind the protector government in a search for the modern equivalent of the moats that tended to surround medieval castles. The circumstances were others, but the assertion is the same: impede things from changing. Impede prosperity.

Rejection to change is ubiquitous. The business chambers are perhaps the most vociferous, but are far from being the only ones. Their argument is reasonable, but absolutely erroneous: first let’s fix what’s wrong and then we’ll talk. Of course, the objective is to postpone this “we’ll talk” as much as possible, leaving the economy and the consumers to pay the piper. It is true that many things do not work or that they work poorly, beginning with the fact that the economic liberalization has been very unequal.  However, the opposition of the business sector to any opening is ludicrous.

Perhaps there is no better example of the absurdity of its opposition to opening than that relative to the negotiation of a free trade agreement with Brazil. The argument of the private sector is that the Brazilians saunter around Mexico feeling right at home, while Mexican products and companies encounter a world of protection and discrimination in that nation. If this appreciation turns out to be true, what the private sector should be doing is to demand from the Mexican government, in the most energetic terms, that it proceed to negotiate the immediate opening of Brazil to Mexican products, because equity can only be achieved in this fashion. Despite this obviousness, their argument is exactly the opposite:  no treaty or agreement should be negotiated until things within the country change. One can only conclude that, one of two: Mexican businessmen are lying with respect to “unjust” Brazilian competition (that in reality would be beneficial for the domestic consumer), or they lack any logical argumentation.  It also could be that they prefer not to change anything. There’s no other choice.

The business community’s attitude is not wholly distinct from that which characterizes other societal sectors or groups, an attitude that is reflected in the poor performance of the economy, in the skepticism and pessimism that have become axiomatic and, in general, in the disorder that our country is experiencing. Of course there are reasons that explain some of these attitudes, but what is astounding is the total indisposition to face the reality in which we have been slated to live. As Hayek once wrote, opposing everything is equivalent to attempting to hold back a great amount of water with a small floodgate: sooner or later, the water ends up not only overflowing the dam, but also sweeping away with it everything in its wake. Out-and-out opposition does nothing except negate reality: it does nothing save impeding things from improving.

A better perspective is offered by Héctor Aguilar Camín and Jorge Castañeda in their excellent new book entitled Regreso al Futuro (Return to the Future): “Removing the PRI from Los Pinos was the battle cry for the year 2000. Leading Mexico to prosperity, equity, and a functioning democracy should be the clamor of 2012. In 2000 we wanted nothing less than democracy. In 2012, we should want nothing less than prosperity”. It comprises the important question that we Mexicans all should be asking ourselves: what is needed for establishing the bases for the construction of growing and long-term prosperity.

The ills of the country are many and very pronounced. However, they are not especially distinct from those that characterize other nations. The difference is, in good measure, that we have decided to bestow privilege on the problems instead of attempting to advance solutions. The paradigmatic case is, without doubt, that of Brazil, where violence is greater than that in Mexico and where the infrastructure is much poorer, and, notwithstanding this, the attitude of its population is exactly the opposite: there, the question is what shall we do despite the problems that we face, and not what shall we do to continue without change.

The case of the business chambers is frankly pathetic. Instead of demanding better services, respect for the law, equity in trade liberalization, and the end of abuse, their demand is for privileges, less opening and, in one word, arbitrariness for my benefit and for no one else’s. This can be one definition of modernity, but it is certainly not a wise foundation for the construction of prosperity.

The paradox lies in that the first great beneficiaries of economic liberalization would be the very businesses who today regard any change with dread. One would expect that the entrepreneur would be seeking better ways of doing things, new technologies, improving its processes, raising quality, and, in order to achieve all of this, pressure the government to make a systematic boost of productivity possible. The Brazilian businessmen may enjoy many protection mechanisms, but their attitude is that of a booming sector that is desirous of improving. Our attitude is that of preserving and, inevitably, purposefully or not, abusing the consumer.

It is evident that the country possesses innumerable businesses and enterprises that are as good as any others anywhere, that are capable of competing and that engage in this daily. These entrepreneurs have demonstrated that the entire surroundings do not have to be perfect nor fully resolved in order to be able to compete and be successful. That is, they are successful despite the difficulties that the scenario imposes, despite the governmental regulations, the lack of security, and all of the obstacles that the bureaucracy can conjure up. However, instead of devoting themselves to holding the country back from progressing, they attempt to drive it. Of course, they all defend their interests, many of which are undoubtedly  legitimate. The political process –within the government, in regulatory and in legislative instances- is there, or should be, to ensure that the general interest prevails, beginning with that of the consumer. Being successful does not clash with having a long-term vision that allows for discriminating among the themes that justify opposition to those that are necessary for the advancement of the country.

The history of the most recent decades shows that free trade agreements have served to improve the conditions for the functioning of the economy and this has benefited everyone. These are clearly themes that merit support –and strategy- instead of fanatical opposition. We cannot aspire to prosperity while preserving that which generates backwardness and poverty.

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Justice and legality ought to be identical and simultaneous, but it’s not always like that. Victims want justice independently of strict compliance with the law, while the accused rely on the letter of the law to avoid arbitrariness. The tension between these two fundamental principles of social coexistence is healthy, but not always easy to conciliate. The case of Frenchwoman Florence Cassez, accused of abduction (and the cause of a major, ongoing, political squabble between the French and the Mexican government), clearly falls through the cracks that this tension produces in its wake. Over and above the specific case, the important question for us as citizens is what type of society do we wish to construct: one that adheres to the rules and obliges everyone to comply with them, or one in which justice is capricious and media-oriented, that is, arbitrary.

According to an old axiom derived from the Roman era and attributed to Julius Caesar’s father-in-law, one must “let justice be done, though the heavens fall.” The principle is logical and powerful: when an injustice, a crime, or an offence is committed, the victim is fully within their rights to claim that the person at fault pay the price of their act in the corresponding manner: reimburse the cost; pay a fine, or serve a sentence. There is nothing more important for a society than that criminals face up to the law and that justice be done.

The problem, as we Mexicans know so well, is that the reality is not always so clear-cut. For example, it is not obvious that justice is being done when a community acts on its own in the form of a lynching. It is easy to understand that a population beset by grief due to the enormous wave of crime from which it suffers, clamors for justice and tends to accept any means of justice to avenge the crime. Within a context in which there have been thirty thousand deaths in recent years and tens of thousands of abductions and many more robberies than that, the fact that at least some criminals end up in jail would appear to be a reasonable form of justice. But, at what price?

Some years ago, there was an illustrative case in Spain. Narco traffickers received drugs on the high seas, and they unloaded them onto speedboats to ferry them to land for their distribution on the drug market. The drugs flowed without greater ado until the police developed the capacity to intercept these boats. In one specific instance that became paradigmatic, the police were able to detain one such craft. However, when officials boarded the boat, the drugs had disappeared into the sea. Although there were photographs of the cargo being loaded onboard, the drug was no longer to be found on it. The prosecutor presented his arguments before the judge, but the lack of proof was convincing: in this decision, the judge affirmed that he had no doubt about the contents of the boat’s cargo, but from the perspective of the law, the lack of evidence was weightier. The drug lords were set free, not because they were innocent, but because the judge put the rule of law first. Along the same lines, many Mexican criminals in the United States have set free or their sentences lowered not because they were innocent, but because the public prosecutors had failed to comply with due process rules, mostly technicalities such as not calling the Mexican consulate as a foreigner has a right to.

The Rule of law is the principle that governmental authority is legitimately exercised only in accordance with laws that are written, publicly disclosed laws that are adopted and enforced in accordance with established procedure. The principle is intended to be a safeguard against arbitrary governance. This is the principle that judges, such as the previously mentioned one in Spain, affirm and with which they exact compliance. These are not mere technicalities; they are the essence of principle of legality, of the rule of law. Poor governmental conduct pays a very high price in the form of judicial failure.

The Cassez case is complicated for these reasons. I have no idea concerning the guilt of the woman. What is clear to me is that there was a multiplicity of violations in the procedures. The victims of the abductions attributed to Cassez evidently, and rightly, cry out for justice. The question is whether any price for that justice is justifiable.

Asserting the rule of the law implies a commitment with a distinct social, political, and legal order. In principle, it entails a disposition to accept the law as the norm and mechanism of interaction among persons and between the latter and the government, whatsoever the matter shall be. It implies that the government (including the police and district attorneys) is required to be scrupulous in its acts. If one contemplates all of the themes in which the society interacts with the government (such as taxes, regulations, murders, robberies, permits, demonstrations), imposing the rule of the law would imply a radical change in our social and political reality. The number of instances in which we the population or the authorities violate the law is amazing.

Certain much-bandied-about cases of crimes (such as abductions or murders) tend to generate an extraordinarily charged environment. The media adopt extreme positions and attempt to lynch the parties presumed to be guilty without there having been a trial. District attorneys incite the mob and fan the flames. Many of these end up with scorched fingers because they were unable to prove their case or because impudence in the procedures defeated them in the end (as in the case of the little girl found dead in her bed a few months ago in the State of Mexico). Our way is that of the crime pages, which is contrary to the essence of the rule of the law, whose main principle is that everyone is innocent until proven guilty. The great question is, then, what kind of society do we want to construct: one that achieves revenge at every corner (and regardless of cost), or one buttressed to the main principle of respect for people’s rights, whether victims or the guilty.

Instead of reinforcing legality, and with it, advancing the cause of justice, we have converted all the themes relative to criminality into a media circus. The authorities create montages as proof of their arguments (as if these were uncontestable evidence), reporters have become prosecutors and judges, and the police and district attorneys are consecrated as the least professional and competent professions of the country. Observing figures –criminals- such as “The Barbie” and the “JJ” become popular heroes should cause revulsion in us because there is nothing more contrary to justice. And, nonetheless, this is the form in which justice and the law, the two central tenements of a democratic society, have advanced in the country.

What type of society, and what type of democracy, do we want?

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