Lao Tzu, the father of Taoism, said that “he who does not trust enough, will not be trusted”. Mexico’s government officials have never trusted the population, this perhaps the reason that the citizenry’s trust in them is ephemeral. The theme is basic for identifying our lacks enveloping the possibility of adopting a development strategy that is susceptible to being successful.

The old debate with respect to the functioning capacity of a government is concerned with what commands more weight: the leaders, or the institutions. Typically, the least developed societies are characterized by weak institutions, while the most developed are those possessing strong institutional structures that regulate the life of the society and that rapidly funnel the whims of the people into these. From this perspective, there is not the least doubt that the strength of the institutions of a country constitutes a key factor in their capacity for development.

Institutions are important because they depersonalize the decision-making processes and confer certainty upon the citizen. An institutionalized society does not depend on whether an individual –be it the president, the prime minister, or the most modest bureaucrat- gets out on the right side of the bed every morning  or feels like attending to the citizenry. Rather, institutions establish limits and processes that hinder these individuals from abusing power. Thus, a good government can achieve the coherent and effective functioning of the entire governmental structure, but a bad one does not wield sufficient power to wreak damage on it. Institutional strength permits avoidance of abuse of the citizenry by an exceptional but perverse leader.

The function of leadership is more complex. A good leader can do magic in a society, but a bad one can cause terrible damage. Paul Johnson* affirms that Churchill was a great leader because he procured the confidence of the society. “We trusted in Winston Churchill to save us, and he in turn, trusted the British people to have the courage and endurance and the intelligence and strength to make salvation possible”. In institutionalized societies, a good leader can be the factor for transformation without placing social stability at risk.

Something similar can occur in underdeveloped societies, but the risks are much greater. One never knows whether a leader will be a positive or a negative factor. The absence of strong institutions that limit the leader or that make him or her accountable converts him or her into an uncertain factor who could as easily be a dictator as an exceptional constructer. Anyone observing the panorama of our history or that of nations similar to ours will find enlightening examples in this regard. Brazil’s ex-president Lula da Silva proved to be an exceptional leader, but he had to run four times for president to win over the population’s trust.

In the eighties, we had a formidable example of the successes and risks of a strong leader. Carlos Salinas was an exceptional leader who broke with the traditional governmental measuring rods, changed fundamental structures, especially in the economy, and transgressed against the power factors that we currently call “de facto powers”. All of this earned him the trust of the population and made it possible for him to advance a significant reform process. This same person eventually made decisions in the currency exchange arena and through the presidential succession process, in addition to mismanaged familial business dealings, which led to one of the deepest crises in our recent history. Vicente Fox did not lead us into an economic crisis, but was elected within an environment of exacerbated expectations that he did not satisfy, but also one which Fox was not even capable of managing, all of which led to enormous and profound disillusionment. Both cases displayed two sides of the same coin: the risks and virtues of a leader in a society without strong institutions.

It may be that much of the pessimism that permeates our present environment is the product of the destruction of illusions generated by these two presidential figures, exceptional leaders who, in the last analysis, disenchanted the citizenry who trusted in them and who in the end felt betrayed, to the extent of their rebuffing any proposal for change: the population delivered their trust to them, but received nothing in return. Had there been strong institutions, the damage would have been less, but not so the disillusion. When expectations are so great, as Obama is now coming to discover, disillusionment is inevitable.

In the same article, Johnson argues that the transcendence of leaders such as Margaret Thatcher and Ronald Reagan in their respective countries was due to that they earned the trust of the citizens because the leaders trusted in the citizenry. “The processes of earning and granting trust are gradual and almost metaphysical. So it is that a good leader, at some point, ceases to be a politician, an office holder; he or she becomes a trusted institution. And from that point on the nation becomes healthier, more secure, and thus, happier”.

Nomination for the 2012 presidential candidates will take place later this year. The population will surely expect that the individuals who run for this office will be capable of exercising effective leadership, but one that lies within the framework of the institutional frameworks in effect that, no matter how weak, are crucial for avoiding replication of cases such as those of Venezuela. Perhaps the greatest challenge will be to find a leader capable of inspiring the population by his or her integrity and strength of character, as well as by their vision and judgment, all of which are indispensable for gaining the confidence of the citizenry and exercising the presidency effectively. If there is something that we require, it is a leader inclined to confront the special interests that hound and paralyze the country but, at the same time, one who is able to understand the limits conferred by the necessary trust of the citizenry.

Fukuyama, the author of Trust, asserts that societies that achieve development are those that construct a solid foundation of trust: trust among citizens to be able to effect market exchanges and transactions or to arrive at agreements in the political terrain. The sole possibility of breaking away from our institutional weaknesses, as well as from the powers that paralyze the country, resides in a leadership that is capable of understanding the risks and challenges, and one that despite this, earns the trust of the citizenry. For Paul Johnson, this is only possible when the leader trusts the citizenry, something exceedingly more difficult to attain and even worse given our recent experiences.

* Forbes, November 18, 2010

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A little over one hundred years ago, journalist and historian Francisco Bulnes published his famous book “The Great Lies of Our History”, in which he demystified the life and deeds of Santa Anna. If it were urgent in that era to decode lies, today our shortfall involves truths. Felipe González, ex-President of the Government of Spain, said not long ago that Mexicans appear to be afraid of the truth, and that this fear translates into irresponsibility, and that this is perhaps the main source of our paralysis today. When the truths are not dealt with, candidates promise the moon and the stars, and no one can make them comply because everyone knows from the beginning that it is no more than a game. The problem is that this game is costing us the viability of the country.

It comes as a surprise to no one that we are confronting enormous problems. This is not unusual in the lives of people or nations. What is unusual is the absolute disinclination, not only to confront and resolve these, but even to discuss them. The problems are not discussed, but rather, are eluded because to confront them is politically incorrect. This leads to the proposal and discussion of law initiatives that are not prone to attacking problems at the root, to presenting proposals adjusted to what the legislative power can tolerate and not what is required, or, simply, that evade the relevant themes. This accomplishes nothing more than nurture the circles of distrust that characterize the relationship between politicians and citizens, and even worse, it lays the foundations of cynicism, which is the first cousin of the pessimism that dominates Mexican society these days.

The dilemmas, injustices, and challenges that plague the country cannot be ignored. What follows here is a brief enumeration of some of the most obvious.

• The oil is running out. It is true that the traditional oil wells can be exploited with better technologies, but oil as a source of financing the public deficit and all of the dreams of our politicians and, therefore, as a mechanism of evading reality, is coming to an end. Despite this, in recent years a new corporate regime for the national oil company Pemex was approved and it was decided to build a new refinery, neither of which is appropriate in view of the current reality. Instead of recognizing the fiscal reality of the country and providing the company with a functional and rational system of internal governance that is appropriate for a rapidly changing company and industry, time goes by without anything happening. Just pipe dreams.
• The flip side of the oil theme is the fiscal matter. The financing structure of public expenditure is very poor, evasion is massive, the bureaucracy charged with tax collection is impenetrable, and, to top it all off, the system promotes tax evasion and provides incentives for permanent growth of the informal economy.
• The informal economy is the sole sector with non-stop growth but, paradoxically, it is also the only sector of the economy that has absolute limits to its growth. There are more and more Mexicans involved in the informal economy (some calculate that it comprises up to two thirds of the economically active population) and it represents between one third and one half of the total economy. The problem with the informal economy is that the enterprises of this netherworld cannot reach a sufficient scale to prosper because they do not want to attract the attention of labor and fiscal authorities, but principally, because they have no access to credit, without which growth is impossible. The existence of the informal economy is the best proof of the erroneousness of our labor and fiscal policies.
• Labor legislation was designed to satisfy the big unions and to guarantee the system of a generous trade-off of benefits for union leaders in exchange for the political control provided for the system by these kingpins. This labor regimen met the political needs eighty years ago, but has, at present, become a burden for the country’s development. What is needed is flexibility, the capacity to create and destroy businesses, transfer tangible assets, and generate jobs that are appropriate to a service economy such as that of the XXI century, totally distinct from that of the basic industry of the last century’s thirties. Union opposition to any change is explicable, but the sacrifice of the remaining 95% of the population is somewhat costly… It is impossible to construct a modern nation while four or five unions extort the government.
• In the matter of taxes, the starting point is mistrust: the authorities do not trust the citizenry; thus, they have elaborated a maze of requirements, procedures, reports, and payments that only an army of accountants can satisfy. The result is a tremendous bias in collection that, in fact, promotes tax evasion. In the labor terrain, a modern country that aspires to success in leading-edge activities and sectors of economic development cannot function without a tax collection system that simplifies and facilitates compliance with fiscal obligations, but, above all, one that derives from co-responsibility and trust.  The fiscal bureaucracy is as much to blame for poor tax collection as are, as well, the tax evaders, who do nothing more than take advantage of the system.
• The judicial system is another of our blights. In the executive quarter, the attorney general’s prosecutors (ministerio publico) are an embarrassment: their incompetence calls for a full redefinition due to their corruption or mere incapacity. On the judicial side, the Supreme Court, although timid in assuming its constitutional character, has become a central pillar of the governability of the country. However, the entire tribunal system is in incompliance with its core objective: they spend wagonloads of money, but justice does not materialize. It is not that everything is corruption, but that everything is designed for nothing to work.

We possess an extraordinary predilection for ferreting out the guilty parties instead of finding solutions, or even elucidating the nature of the problems. One cannot pretend that the economy works while fiefs, privileges, and preserves of power prevail. A competitive environment cannot be created from one that excludes, before it starts, key sectors of the economy such as oil, electricity, and communications. Those interests may be very powerful, but as long as these topics are not discussed in public, it is impossible to begin to defeat the former, and reticence to do so winds up being an accomplice. We must call things by their name, and Mexico is experiencing a profound fear of facing the key issues that paralyze us. “The nation that does not love the truth”, said Machiavelli, “is the natura6 l slave of all of the evildoers”.

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“Don’t cross the stream to find water” says a Norwegian proverb, which is perfectly applicable to our dilemmas with respect to growth. Years of listening to governmental projects, independent proposals, and interminable discussions that contrast with the reality have obliged me to rethink my own appreciation of things and reflect on our penchant to ford the stream in search of what is there, directly in front of us.

The initiation of a year, and above all in this bona fide political year, would make it propitious to redefine the basic theme for our country. What follow are ideas, observations, and lessons learned concerning economic growth.

• Transcending all else, the problem is not technical but political. No matter how entrenched special interests and de facto powers are, the country needs ways out. What is required is a combination of project, strategy, and leadership. Countries that have been able to emerge from their respective logjams have assembled these three factors, on occasion surgically and in pre-planned fashion (such as Singapore or Korea), but in the majority of cases, it has been less plan than the political capacity to articulate a solution. This is where we have failed.
• This said, the technical component is fundamental. Years of meetings of the so-called “Huatusco Group” between economists of distinct schools of thought reached agreement on the general, but not on the specific, aspects. Many continue to think that the solution lies in a deficit in public expenditure, while others would leave everything to the market. The former do not recognize that when excessive demand is generated, we begin to import, and this leads us to an exchange crisis. The latter ignore that the government is there to create conditions for things that would otherwise be impossible. Some infrastructure projects are not inherently profitable, but they can make it possible for an entire region to develop, generating economic as well as social returns that transcend the original project by far.
• Our true challenge is the functioning of the government: we went from a government that did everything to one that does nothing, beginning with security. The government must create the conditions for development, blaze the trail, and set the economy on course. The solution does not reside in engendering an industrial future founded on protectionism, but rather, fostering investment in the country, starting with the development of an industry of national and foreign suppliers, but based in Mexico, as well as sectors of obvious potential, such as tourism.
• In Costa Rica, a tiny nation, the government offered a (proportionally) huge subsidy to Intel for them to establish a factory for manufacturing chips. Everyone criticized the project because, they argued, there was no sense whatever in subsidizing a private enterprise. These critics were right, but the government that provided the subsidy was thinking on a grand scale: what it wanted were not 300 direct jobs, but to convert the plant into a trigger of the transformation of Costa Rican into a services economy: the project obligated them to modify the entire educative structure of the country, forced them to construct modern industrial parks, and required investment in physical and health infrastructure comparable with that of other nations who wanted Intel. The result is that the whole Costa Rican economy was transformed from a sole project. No other Central American country has the perspectives that Costa Rica entertains. Leadership and vision.
• The business community complains about lack of credit. The evidence suggests that the problem does not arise there. Instead, our economy has split in two: the big companies that compete and export have no problem at all with acquiring credit, while the small ones have neither project nor capacity for utilizing credit. But the essential problem dwells in the factors that drive the existence of small businesses. One way of understanding the problem is that we have a formal economy made up of, typically, big businesses, and an informal economy composed of small businesses. The informal economy lives in tax and employment obscurity, which pleases many of the proprietors, but impedes the growth of employment, production, and productivity. At the core of the problem are found the tax and employment laws that, in practice, encourage informality. Labor costs and obligations are so trying and costly that they discourage formality; the fiscal procedures make tax evasion attractive. To grow, these two components will have to change. There’s no other way. While the tax bureaucracy and union interests continue to gain, the economy will remain paralyzed.
• Anyone who observes the creativity of the Mexican (from jacks of all trades to the pop and candy sellers in Mexico City traffic loops) knows that the entrepreneurial potential of the Mexican is infinite. However, this potential runs smack into the wall of bureaucracy, informality, insecurity, and rules of the game that favor big business. Creating a business is a hassle, and to registering it on the stock market is a near-death experience. The Brazilians are not better entrepreneurs, but their rules of the game facilitate the development of driven entrepreneurs who are disposed to have a go at it: in excess of one thousand businesses are registered on the stock market every year. Here just one group is worth more than 60% of the stock market.
• To construct a country requires a sense of course and the certainty that the rules of the game will stand up. This is what differentiates rich from poor countries. When rich countries change the rules, as happened recently in the U.S., investment collapses. If this occurred there, where the institutions are so solid, here the challenge and the risk is immense. Time has convinced me that there is no successful country without strong and competent leadership. On lacking strong institutions, someone has to forge them and this implies vision and obliging the interests that have us paralyzed to fall into line. Of course, to bet money on an illuminated leader is equivalent to playing the lottery; but the evidence is enormous: Spain, Korea, Chile, Singapore, India, China, Brazil, South Africa. In each and every one of these cases there was project and leadership. And of course, there are dozens of examples of failed leaderships that led their countries, including ours, to break down. The difference must be made by a society that protects competent leaders but that at the same time delimits them and obliges them to behave. What we don’t need are power seekers, caciques in disguise, gamblers, or hope mongers of revolutionary justice. At the initiation of these pre-election years, it is imperative to meditate on the type of leadership the country needs and on the determinants to be imposed so that, once and for all, it would be the country that would prosper.

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Now that he has finally been freed in order to be able to redirect his life in this world of criminality and abuse, there are two indelible characteristics in my head concerning this man of light and shadows who is Diego Fernández de Cevallos: his infinite disposition for being of service and present under difficult circumstances, and his extraordinary capacity for resolving problems, negotiating situations, and contributing to the nation’s progress. His human quality and his vision as a statesman exceed all other facets of his life as an attorney of interests and causes that are on occasion difficult to defend: the nature of his businesses has never restrained him from being solicitous of the issues and problems of others, and he has always had a special ability for “appearing” at key moments or in crisis situations. No less momentous, he has unfailingly been predisposed to devoting himself to national affairs, and never mistook national affairs for others. The terrible experience that he has undergone is, finally, over, permitting and enjoining us to think of the public Diego, Diego the statesman.

His abduction distressed many, and at the same time served for others to collect on debts and experience what the Germans call schaudenfraude, relishing in another’s misfortune. I suppose that a personality as strong and as involved in such a vast array affairs and themes inexorably generates passions, but it is also too facile a way to ignore, and, above all, disregard, the relevance and importance of a person such as Fernández de Cevallos in the political panorama. The figure of Diego countenances speculation on something historians have always cautioned against: what would have happened had Diego been president instead of the two PAN Presidents.

Fortunately, it is unnecessary to enter into speculation excessively. Diego’s momentum through the legislative power in the eighties and nineties provides irrefutable data as well as tangible examples that illustrate what, predictably, he would have done, at least in terms of his modus operandi, on reaching the presidency. In that era, while Fox literally donned donkey ears on the occasion of one presidential address to the natio to illustrate his anger with the old system, Diego devoted himself to negotiating many of the few reforms that were advanced during that period and that emerged as extraordinary when compared with subsequent ones. Thanks to his lawmaking leadership of the ranking legislative minority, when he was anointed “Chief Diego”, reforms were approved in banking, electoral, agricultural, and commercial matters. Easy enough said, but had Salinas not encountered an opposite number such as Diego, it is perfectly feasible that even the scarce advancement of that epoch would have been impossible. Many will argue that this latter scenario would have been preferable, but it is evident to any reasonable individual that, for over 20 years, the country has been able to survive -economically as well as politically- thanks to that relatively modest series of reforms.

Had he been president during the post-PRI era, that is, from 2000, it is reasonable to suppose that Diego would have exhibited a negotiating attitude, would have sought out the PRI, but probably also the PRD –his pragmatism supersedes any ideological stumbling block- for advancing the modernization project of the country. Beyond what the government of a pragmatist would have been able to achieve or any speculation on what would have comprised his government’s agenda, there are three things that appear indubitable to me: first, it would have had clear objectives; second, it would have had a strategy to attain these, and three, it would have transcended the hindrances and psychological and historical barriers that characterize and bar most members of PAN from constructing a national agenda. I entertain not the least doubt that his logic would have been one of achieving the objectives and not of collecting on past invoices.

The crux of the matter is that two PANist presidents, each with his own personality and characteristics, have had a sole common denominator: their absolute unwillingness to deal with the PRIists. Lest the first PANist government would have attacked the PRI to the death immediately on assuming the presidency in 2000, the anti-PRI strategy ceased to have any viability after 2001 and became a mere parapet and justification for the lacks and insufficiencies of those administrations. It is evident that one possible strategy would have been that of giving the PRI an ultimatum: institutionalize, or we will respond with the full force of the law to all of the evils caused by their governments. In retrospect, it is impossible to determine how feasible or successful a project of that nature might have been, but no doubt assails me as to whether the opportunity for doing so was available in 2001. After that juncture, everything proceeded to another plane and the PRI became the only practicable counterpart. Fox and Calderón decided not to take this upon themselves and, in so doing, condemned their administrations to the disaster that history will consign to them.

I have no idea of how many pragmatic PANists like Diego exist, but they certainly have not been presidents. The complexity of divided government is not minor, but the former has been accentuated by the absolute absence of pragmatism and recognition of the realities of power in the post-PRI era. Observing the behavior of the most prominent politicians of both stripes from 2000 on, I am left with the distinct impression that we would have been able to advance to a much greater degree had there been the capacity and the negotiating disposition to effect this. Institutional structures are most important, but it is very easy to exaggerate their relevance in a country with such weak institutions. Under these circumstances, effective leadership could have done magic.

Diego, as all of us, has his fallibilities, but within the context of a country with enfeebled institutions that lived for years under the yoke of authoritarianism and the discipline imposed by unwritten rules, he has been the prototype of the “one-man institution”, that rare species of person –of which there are many- who engages in diverse activities –those of government, political parties, business, journalism, etcetera- who is committed to a vision of the State and who places this above other considerations, and without the existence of whom it probably would have been impossible to compensate for the personal as well as institutional shortcomings of our public life. What wields an impact is that this “species” developed at all, particularly because this practically did not occur in most countries that experienced submission to military and authoritarian dictatorships.

It is impossible to imagine what the extent of success or failure of a PANist government headed by a person like Diego would have been in the post-PRI era. What I do not entertain any doubt about is that he would have at least made the attempt, and in this the difference would have been enormous.

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A proposal to solve the problem of narcotrafficking and construct a new development platform is circulating on the Internet. Some perhaps might brand this as unviable, and it certainly is no more than an expression of deep frustration, but a keen and experienced observer of our political/governmental idiosyncrasy affirms that “this is the most serious and best conceptualized program that I have seen. Above all, because it is perfectly feasible and doable by our excellent political class”. The issue merits serious consideration.

The proposal is elegant in its simplicity: it proposes ending narcotrafficking in three years by means of an infallible methodology, the NONAMEX project.

The project comprises five steps: “I. Legalize the drug business; II. Declare it a strategic area for national development; III. Nationalize the narcotics production industry; IV. Create an autonomous entity to run a state monopoly on drug production and commercialization: the National Operator of Mexican Marijuana and Alkaloids (NOMAMEX); V. In a national assembly headed by the following delegates and senators: Carlos Romero-Deshamps; Napoleón Gómez-Urrutia; Joaquín Hernández-Galicia; Elba Esther Gordillo, and Martín Esparza-Flores, among others, constitute the Mexican Union of Narcotics Industry Workers; VI. Wait a couple of years; VII. Create a legislative commission charged with auditing NOMAMEX, and VIII. Problem solved. In the third year, we will be able to observe, among the National Narcobusinesspeople, strikes, internal power struggles, and absenteeism. The narcotics industry will have imploded by then and will require a fundamental judicial reform. It is entirely certain that products will become scarce and will cost 40 to 50 times what they should, completely inhibiting demand and steering all members of the thriving industry headlong into poverty”
The author, presumably an individual named Francisco Vidal-Bolado, added an illustrative corollary: “This methodology has demonstrated its results experimentally, and chief among its achievements have been the oil industry, the sugar cane industry, the agro industry, the electrical power industry, the mining industry, and the fishing industry, among many others”.
One may either laugh or cry on reading this proposal, but we can not but recognize the spirit that produced it. Our politicians believe that no one notices what is going on in our environment. The laws that are approved are not conceived of for normal citizens, those who want to live their lives and take advantage of the opportunities that life generates, but rather are projects designed by and for bureaucrats who engage in nothing better than pillage and plunder. The text also reveals profound resentment toward our public officials, not only because of their waste of national resources, but also due to the absence of practical and workable solutions.

The proposal reminded me of another project of similar depth and disenchantment. Fifteen or eighteen years ago, Josué Sáenz, the self-avowed “high-level functionary of the low-level bureaucracy”, proposed the immediacy of creating a “trust fund for the protection of the penguin”. Due to its geography, said Sáenz, Mexico could claim to be part of the Antarctic Treaty and, as such, could create a legal framework destined to protect the penguins. He proposed sending our ruling class to be in charge of administering the trust fund. The Penguin Trust Fund (FIDEPIN), stated Josué Sáenz, would keep our politicians busy, but the latter, he concluded, “will most certainly finish off the penguin”.

The theme changes but the tenor remains the same. Mexicans need nothing other than a climate of certainty within which to work. The Golden Ages of economic growth in Mexico took place punctiliously when this certainty was achieved. In the fifties and sixties, the population basked in a legal platform that was credible, people trusted in the word of the authorities, and the economy worked: savings and investments were generated. It took the regime emanated from the Revolution decades to win the trust of the population and, little by little, to lay the foundations for the development of an emerging business sector. Years of construction fell through when, at the beginning of the seventies, the government changed the rules of the game and incorporated all types of regulations and restrictions that did nothing more than swell the bureaucracy and restrict economic growth.

In the eighties, there was an attempt to restore the climate of certainty, but the sole mechanism found that would be capable of generating confidence was a bilateral agreement with the U.S., the North American Free Trade Agreement (NAFTA). This instrument eliminated the arbitrary powers of the bureaucracy in many an economic sector, which fostered the growth of investment and, briefly, relatively high rates of economic growth. Regrettably, the political war that began with the rescue of the banking system through the FOBAPROA, the inconclusive political transition, and the lack of a sense of direction as well as of the institutions with which the democratic era came into being, ultimately undermined trust. It is not by chance that the only part of the economy that presently works in a nearly automatic manner is that which is regulated (and, thus, protected) by NAFTA. All of the others stayed behind in history or are alive but harassed by regulations and red tape that hold the country back from flourishing.

Propossals to end narcotrafficking or to save the penguin are none other than the mental lucubrations of desperate Mexicans who know to perfection how our country works. Their proposal is nothing more than a satirical portrayal of daily life, which is obvious to all except to those in whose hands lies the possibility of changing the reality. And worse, experience shows that the obstacles to any change are so formidable –the interests so convoluted- that even when a president that made his early career in business comes into power or when upright officials who understand the problematic are charged with responsibility, they end up entrenched, incapable of carrying out change and constrained to explaining why none is possible. Frequently, Congressional leaders do nothing more than condone the system to safeguard their own privileges.

The political change in 2000 did not transform the power structures in the country: it modified the power flows and the relative checks and balances among those who wield it, but did not change the fact of political, bureaucratic, union, and business control. It is impunity and privileges that render narcotrafficking possible and that hold back the development of the country. Only when both of these take their leave will it be possible to deal with the narcotrafficking, and, if luck would have it, save the penguins…

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The economic crisis of the last few years could hardly have arrived at a more ominous time for the old international order. The institutions, practices, and power relations that arose with the end of the Second World War and the agreements signed in Bretton Woods placed the U.S. at the center of the world and of the institutions that would norm the functioning of the markets, trade, and financial transactions at the heart of international interaction. Sixty years later, things look quite distinct. China has become a formidable international actor, the economy of the so-called emerging countries has taken on unusual importance, and the majority of developed countries are in crisis. The old pyramid has been inverted, changing the political reality.

Ian Bremmer, the author of The End of the Market, a somewhat exaggerated title given the book’s content, says that the great change originated in the new correlation of strengths among the nations of the orb, but responded more than anything else to what the author denominates “state capitalism”. According to Bremmer, a group of countries, the majority with authoritarian or autocratic governments, has distanced itself from the rules of the market in the last several decades thanks essentially to active promotion of their legal enterprises, discriminatory game rules, and sovereign investment funds. With these instruments, they have been able to upset the institutions that modulated commercial and investment relations from the fifties on and that presently threaten the functioning of the existing economic order. Some of these nations, notably China, have distinguished themselves by the manner in which they have led their economies and achieved high economic growth rates, while others have come into power due to the possession of ample oil fields, above all in Russia and Saudi Arabia. The author includes nations as diverse as Egypt, Brazil, India, and Ukraine, and Algeria in his argumentation, throughout which he attempts to prove that the market has worked very well and that the international order runs the risk of coming to a standstill in the coming years.

The real thesis of the book is that the balance of power at the international level has changed, that the U.S. no longer represents the power of days gone by, and that other nations, particularly China, feel that they have the same right to define the form in which economic activity should be adminstered. That is, that the old hegemony has fallen and that the values that the U.S. drove in terms of market economy and democracy have lost legitimacy. The thesis is not novel, but does not cease to be relevant for this reason.

If one analyzes the argument at length, the truth is that the contraposition of stances is interesting but not always accurate. The efficient operation of an economy is not easy to achieve. To create institutions and game rules for a market economy requires not only conviction, but also a government capable of making these work, and this, as we have observed in Mexico over the past years, does not always occur. In addition to this, democracy, altogether necessary in a market economy, as such requires institutions and incentives that make it operate. In the absence of these, it is impossible to expect that it would function thus and that the political actors would behave according to its rules.

In addition to this, many nations have not even assumed the role of constructing a market economy or a democratic political system. It has been difficult for the group of nations cited by the author to distinguish themselves by their attempts to build a functional democracy and, when they tried, as in the case of Russia, the experiment lasted only a few years. It is in these terms that the true thesis of the book comes to be relevant because it entails lessons and consequences that we must not disregard.

What is exceptional concerning the ascent of nations such as China in the international concert does not lie in the fact itself, but inasmuch as the history of the world has been characterized by power transitions time and time again. China’s rise is interesting because it is an enormous nation with a centralized government and with strategic vision that not only is capable of derailing the international power balance, but also, the very way in which the planet operates in ambits ranging from the economic to lifestyle. Other nations that are similarly large, or more so, such as India, will perhaps end up having a lesser impact because they are characterized by a more diffuse internal power structure, independently of whether they have the possibility of being much richer in the last analysis. In addition, the great theme is less who ascends and who descends than how interaction plays out among the most powerful nations.

China and the U.S. have had many years of cooperation, but during recent times, seem to have advanced on a collision course. When one listens to the Chinese officials, the message, loud and clear, is that they do not seek a collision, but rather, a more equitable route to defining the main themes that afflict and characterize the world. China, a proud nation that feels it is in the right, sees no reason for having to submit to the game rules established by the U.S. as the dominant power sixty years thence, or for its internal, economic, and political evolution having to resemble what the Western world has fancied.

For decades, from the time that China reincorporated itself into the world and launched its economic opening, the presumption of the U.S. was that economic growth would lead to demands for political participation, which in turn would transform China into a democracy. This scenario may continue to be possible, but as of today, there is no doubt that the centralized political system whose functioning derives from the Communist Party retains the political power. To date, China has achieved this to a great degree due to its obsession for maintaining high levels of economic growth and its disposition to change whatever is necessary, to reform any structure or institution, with the objective of achieving growth. This strategy, in dramatic contrast with that of our Mexican politicians and governing class, has kept the population of China satisfied.

The current power equilibrium in China and between China and the rest of the world will depend in good measure on how the U.S. negotiates with and appeases, or confronts and threatens, the Chinese government. Whichever the form, what is not subject to doubt is that, as Napoleon said, once the Asian giant awoke, everything would be different.

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In his 1990 Nobel Lecture, Octavio Paz affirmed that “History’s sun is the future and Progress is the name of this movement towards the future”. What is difficult is to determine precisely when it advances and when it recedes: what is progress, and how is it achieved. Although it is easy to observe the great number of instances in which the country has experienced a sensible advance, the greater part of the population perceives a going backward, and entertains the sensation that things are bad and can only get worse. This has created visceral opposition to any change, but also, and paradoxically, unwholesome sympathy on occasion with miracle workers, conspiratorial theories, and other similar deviations. How can progress be measured in a better way?

The perceptions that citizens devise respond to the events, circumstances, and realities that are affecting them. A person or family may have a much better quality of life today than twenty years ago, a situation that can be measured objectively and convincingly, and, however, perceive that their situation is worse. Part of this is explained simply by the comparison that people make with their peers, partly due to objective situations (I could be better but I don’t have a job, which makes me worse), and in part due to a sensation of lethargy, paralysis, or inaction that has characterized the country for decades. Things could improve, but the generalized sense is that they get worse or, at least, don’t get better.

Gauging democratic progress is even more difficult than assessing material and economic progress because there are no measurable indicators that are grasped with ease. While one is able to calculate a salary and compare it, after removing the effect of inflation, with that which one earned twenty years ago, the same cannot be said for access to power, inter-party competition, or the quality of government. Some of these factors might appear evident (for example, that there is more freedom of expression), but it is also inescapable that, currently, more journalists lose their lives in the line of duty, above all in the world of criminality. Similarly, although it is obvious that the administration of electoral processes has improved dramatically, it is also plain that abuse by governors determined that their dauphins win elections is greater than ever

One way of appraising advances in political terrain, albeit not particularly orthodox, is to observe what has occurred in other societies that have gone through similar processes. In a work on Soviet archives, Jonathan Brent* describes his odyssey attempting to be granted authorization to publish, outside of Russia, the documents (letters, speeches, and writings) of the Soviet era, principally the documents of Lenin, Stalin, and the Communist Party. This narrative is much more than a story of the vicissitudes one would expect of an ambitious editor; it is, in the main, the description of a political system: what has changed; what has remained the same, and where something that had changed shows signs of retrogression. Eschewing all proportion, this appears to mirror our own recent evolution.

Brent begins by describing the stench that is breathable in some places, but this does not exactly refer to something one breathes, but rather, something that is perceived: as if something of the old system never disappeared and continues to be there. Although there is great aperture -people are free to travel, there is full access to the external world, and there is ample freedom of expression- the old bureaucracy remains ensconced in place and conducts itself as if it owned the world instead of as in the citizenry’s employ.

Brent’s description of the bureaucracy is extraordinary, not because it depicts the taco, the torta, and the cafecito (typical of a bureaucrat’s office in Mexico), but because it lusts after control, imposes bureaucratic requirements, works little, and boasts being the law personified. In its modus operandi, there is no notion of explaining what is required for approval of a determined procedure, and the rights of the citizens that are consecrated in the Constitution do not exist for those with the power to utter yes or no. Period.

Brent’s general message, and what brought me to think that the book is about Mexico, is that culture is more persistent than ideas and political regimes. People are accustomed to doing things in a certain fashion, and it is very hard for them to modify their patterns of behavior. Although many of the incentives have changed -in the case of Russia, for example, there are no longer detentions by the secret police in the middle of the night- arbitrariness remains the norm: the judicial authority decides whom to persecute and whom to set free, what constitutes a crime and who is guilty, and what their fate will be. In other words, the regime changed but judicial arbitrariness survives intact. The theme of culture is particularly ominous because it comprises one of the central factors making up the way people understand a theme, it shapes their responses, and even their thoughts.

In the economic ambit, the Russian continues to live in a world in which it is easier to make a living by stealing than by producing. Efficiency is a non-existent term, and productivity, even more so. Legality is what the authority and the powerful say it is, what we here are given to call “de facto powers”. In this context, it should not be surprising that corruption continues to be an instrument of power, although, states Brent, this responds to that there is no rule of law.

Mexico was never a totalitarian state like the Soviet one, but many things that Brent describes are revelatory in terms of what we have advanced in, as well as the enormous stretch that we still have to cover. For example, in the economic milieu, Mexico is much more advanced than the author describes. Although the fact that the country has a long way to go is unmistakable, Mexico’s economy is a Swiss timepiece compared with the current Russian oil economy. In terms of its bureaucracy and the judiciary, Brent’s description appears to describe Mexico. But in terms of the power exercised by the government, Russians have much more to fear in theirs than Mexicans do. Here, we have a dysfunctional government, while there they are experiencing the recentralization of power, something that surely does not bode well. This is no Nirvana, but the comparison allows one to think, or at least to dream, that what we have is progress, some type of progress, at long last progress.

*Inside the Stalin Archives, Atlas Books, 2010

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Democracy, according to Schumpeter, is a “method for making decisions”. This definition is so broad and pragmatic that it permits many forms of implementation and entails a key principle: the crucial part of democracy does not reside in compliance with certain forms, but rather, in the legitimacy that it enjoys among the population. The question I ask myself is how we can make compatible this functionality-based concept based with the reality of a society such as ours that is so given to form over substance.

The forms in our political society are rigid in part because of the legal system inherited from Roman law, but also are due to the nature of the political regime that institutionalized and structured public life. The great paradox of the PRIist political system lies in its rigidity of form, in which the most important rules were the “unwritten” ones. There were rules for everything, all written and codified, but these were of no matter. The system operated in relation to the unwritten rules. As Héctor Aguilar-Camín once wrote on the written norm, “… this is a typical regulation of Mexican legalism: it is exacting, rigorous, untouchable, and unable to be complied with. And no one has read it”. Of course no one read it, because the rules that are (or were?) truly worth their salt in the country are those that are not written down. What has changed is that in the world of yesteryear, someone made people comply with the rules, even if unwritten. The party-in-power changed but the system remains, except that no one has the power, the capacity, or the willingness to exact compliance with any rule.

How are we to escape from this labyrinth? If one observes successful countries, their central characteristic is the existence of rules of the game that are efficient and credible, that is, that generate legitimacy. Pursuing Schumpeter’s idea, the key is not the set square of the normative system. But instead, it is that the population is satisfied, that it respects the process because it considers it to be reliable, fair (however this is defined), and that it achieves the expected result. Successful societies differ in methods but coincide in that their populations consider them to be legitimate.

It is interesting to contrast three ways of being: in Japan, the public-policy decision-making process is long and conflictive, essentially “closed” in terms of everything happening within the bureaucratic and political apparatus; but once agreed upon at this stage, its implementation is very swift. For many, this type of process would be considered opaque and not very democratic because the population does not have a direct participatory role. However, the Japanese see it as representative: what is important is the perception, not the set square. In the U.S., the process tends to be rapid, but afterward there follows ample space for discussion. In contrast with Japan, the U.S. process is open, public, and conflictive, one in which all interested parties have the right to participate, and this generates legitimacy. In Mexico, the process has changed. Before, it was closed and its implementation fast. This is what many miss, because it was effective and was perceived as legitimate. However, over the past several decades, policy design has become conflictive and uncompleted, there is great conflict with respect to its implementation, and it frequently ends in paralysis, all of which has generated a perception of illegitimacy.

The key theme is the perception of legitimacy, and this is where another enduring theme enters into the Mexican discussion, but one that usually does not end in a pragmatic, functioning decision. Our devotion to form has led to the identification of legality as formal compliance with the norms. The majority of attorneys sustain the thesis: if the form is complied with, it’s legal. However, this has led to the norms being changed so that legality will not be violated, a situation that is contradictory in any light.

Perhaps the most important point of controversy is the purpose or raison d’être of the rule of law. Typically, to those concerned with compliance (or, in our case, non-compliance) with the law, what is important is to possess an instrument, conceptual as well as physical, that allows “enforcing compliance with the law”, i.e., that written and codified laws exist, and also the coercive means for compliance with these. This is what occurred to a certain degree in the PRIist system; the forms were maintained, and there were police and judicial bodies with the capacity and disposition to make them be complied with. However, this framework left the individual completely defenseless: it protected those who were in the government’s inner circle through the unwritten laws and discretionary use of authority. Thus, certainty depended on the person who governed, not on rule of law. If we wish to achieve the construction of legitimacy within the context of our current reality, we would have to invert the equation: the law should protect the citizen from discretionary use by the governing official and should be applied to both in identical fashion: rights and obligations.

In a fascinating book that appeared recently, entitled The Rule of Law, Tom Bingham affirms that the Rule of Law is not a conjunct of laws, but rather, a series of fundamental principles that norm the behavior of a society. Among these principles we find the following: the law must be accessible, intelligible, clear, and predictable; the themes of rights and responsibilities should be resolved by means of application of the law and not through the exercise of discretion; laws should be applied uniformly to all, whatever their rank or condition, except in cases in which objective variances justify a differentiation; the means should be provided, without excessive cost and without delay, to resolve legitimate disputes among persons unable to settle these themselves. Each of these principles, and others I have not included in this list, has a long history that lends content and sustenance to it, and more importantly, these confer certainty on the citizenry.

Bingham’s explanation is not very different from that set forth at one time by Douglas North, who wrote that, in essence, the Rule of Law implies “the government in all its actions is bound by rules fixed and announced beforehand–rules which make it possible to foresee with fair certainty how the authority will use its coercive powers in given circumstances”. The heart of the matter is the certainty and predictability that, in a great, complex, and diverse society, “can solely be provided by the Rule of Law, which, on being transparent, universal, and identical for everyone, ensures adherence to principles that free and protect”.

The arbitrariness that characterizes us will get us nowhere.

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An old refrain says that the genius of democracy resides in alternation of parties in power, because it compels the opposition to take the situation seriously: as long as the possibility exists of arriving at power, it is condemned to worry about the future. We Mexicans are on the threshold of the possibility of experiencing a new alternation of parties power, but it is not obvious whether the potential new occupants of the Los Pinos presidential residence are clear about the deep-seated change that has characterized the country.

Today, ten years after the first alternation in the presidency materialized, it is fashionable to hold the transcendence of the very deed of power having changed hands in disdain. Many recall the PRI with nostalgia, while others declare that we would be better with someone else. Some have already declared that alternation has failed as the cornerstone of democracy and respect for citizens’ rights. And, without doubt, if one focuses exclusively on the errors, bumbling, misinterpretations, and the insufficient governing ability of the PAN administrations, it is easy to justify any bias that one might entertain. If we limit ourselves to evaluating alternation as simply a switch from one government political gang to another, it is clear that alternation is worth little.

No one can doubt that what the country has become in recent years leaves much to be desired. Wherever one looks, economic performance or citizen tranquility has been poor, to say the least. However, on examining the numbers of the last forty years, one finds that the current situation is not very different. There are certainly many negative aspects that are attributable to the two PAN administrations, beginning with the newly inaugurated Fox government’s squandering of the great opportunity to transform the political system. But the negative tendencies that the country experienced date back to the sixties, when the slump in the economic growth rate began. In the seventies, we participated in an apparent economic improvement, but we have not yet recovered from its cost in terms of legitimacy, inflation, and debt. With Salinas, we were witness to an ostensible rebirth that did not last. To maintain that the country’s problems began in 2000 is simply absurd.

It would be similarly ludicrous to suppose that nothing has changed from 2000 on. The manner in which the post-revolutionary regime revolved the problems of political stability and power was to centralize these. First through hammering it into people, and later by means of incentives and controls of every genre, the PRIist system concentrated the power with which it was able to make decisions and demand compliance. The system, whose bud growth was the bonding between party and presidency (and the permanent exchange among both), involved a grid of structures, organizations, and mechanisms with tentacles that spread everywhere, which would allow for castigating dissidence and quelling rebellion. The system weakened over time, but concentration of power continued being its main feature.

Despite Fox’s failures and his blindness in the face of opportunity and the urgency to renegotiate power relations with the PRI, the very fact of his defeat changed the country forever. Independently of his achievement or failures, the “divorce” between the PRI and the presidency changed Mexico because it threw into disorder the pivot that permitted centralization of power derived from control of the population, businesses, unions, parties, the media, and the country in general. We have only to observe the manner in which an infinite number of organizations, groups, and companies distanced themselves from the PRI– and established themselves as independents- to illustrate the depth of the phenomenon. The seemingly sudden appearance of the so-called “de facto powers” was not so sudden: all of these were already in existence, but there was also some degree or capacity of control over them. The loss of the presidency left the PRI more as a party and less as the system of control of former times.

If one chooses to see the glass as half empty, it is clear that the disappearance of the old system was accompanied by the end of the certainty that control proffered. At the same time, if one regards the glass as half full, citizens abruptly acquired levels of freedom in which they, never before under the PRIist system, had relished. Neither of the two is perfect: today we have the uncertainty typical of democracy, but we have lost our bearings; we have broad leeway of freedom, but public insecurity does not allow us to exercise this.

In addition to what is undesirable, what is sure is that it is impossible to reproduce the old system. First off, it is impossible to go back to subjecting all organizations to a PRI-type regime. Second, beneficiaries of the power decentralization -governors, party and legislative leaders, and de facto powers- would not easily permit interlopers. The governors, who at present comprise a microcosm of the old presidentialism, will not relinquish even an iota of their new power. Third, there are countless legal and financial frameworks that have been employed for underwriting development projects at the state level that are not subordinate to federal control. Finally, it is a fallacy to suppose that the problem of insecurity and narcotrafficking is the product solely of governmental incompetence: the phenomenon is another. Narcotrafficking is a de facto power with appendages that are much more momentous than those of any other interest in the country. The backroom arrangements, understandings, and slush funds that countenanced narcotraffic functionings for decades were the product of the circumstances: there was a government in full control, but there was also narcotrafficking, whose business was purely conveyance South to North. This has now changed; we cannot go back as much as we might wish to, although we must confront this intelligently.

Many PRIists see Putin as a model of power reconcentration and de facto power submission to be imitated. There, as here, many politicians think that the worst that could happen to a country was to enter into a democratic game playing era. However, Putin’s power is not that of Stalin, and the old Communist Party is one of myriad players. It also cannot be ignored that Putin’s strength is due more to high oil prices than to the strength of his economy or the solvency of his government.

The relevant question for the person who aspires to govern Mexico from 2012 on is not one of power concentration, but in its stead, one of the construction of a political system capable of making decisions within a context of effective checks and balances that results in robust and sustained economic achievement. The old system should remain where it correspondingly should remain: in the past. Today, it is key to start to construct the future, because not even the PRI can live from the past.

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The story recounts that Commodore Perry, hero of the War of 1812, coined the phrase “We have met the enemy and he is us”. Something similar could be said of the old PRIist system; it continues, alive and kicking, because it benefits us all or because we believe that it benefits us in some manner. While all Mexicans, from the most modest to the most exalted, have aspirations to improve, the old system was so overwhelming and omnipresent that it affixed itself to the innermost core of our being. The result, visible in all ambits, is that although we consider ourselves modern, something of the old, something that holds us back from changing, continues inside there.

Benefits and privileges, small or large, are always attractive. It might bother us that an individual appropriates the public thoroughfare and later rents it out as a parking lot, but it is very convenient to find somewhere to leave the car when one is hurrying to a dentist appointment. It is easier to talk to someone we know for getting some official procedure taken care of without having to wait in line. All of these small privileges are in reality ways of discriminating against the entire remainder of society. Of course, none of these peccadilloes compares in sum with the abuse represented by the communications monopoly or the multimillion-peso transfers received by a public-sector union, but the concept is exactly the same. All of these are privileges that function at the cost of everyone else. The culture of privilege, of influence, and of rights without a counterclaim constitutes an affront to the country’s development.

The leading question is how we can turn this reality around. History relates that when the Romans finally achieved not only the defeat but also the destruction of the Carthaginians, their most powerful enemy, they thought that their Republic finally was safe and sound. What they did not take care of was themselves: as soon as they finished off the Carthaginians, the Romans themselves began to undermine their own Republic by abandoning its institutions, reducing its freedom, and gnawing away at its prosperity until they ended up in a civil war. We Mexicans are undermining our own viability as an organized society insofar as we play the privileges game, because we are rendering the functioning of a competitive country and a decent society impossible.

To leave the past behind is something easy in concept but difficult in practice, especially at the individual level, when a person or a family decides to break with these mores in order to attempt to live within a commensurate world in the eyes of the law. Many of us have made attempts in this regard. I remember two specific cases: on arriving to renew his driver’s license, an acquaintance of mine found himself with the receptionist who immediately asked him if he wanted normal or express service. Not understanding the nature of the question, my friend opted for normal. Hours later, after observing that the expeditious service involved only a few minutes, he finally succumbed: the receptionist alone could not change the system. The opposite occurred with a Mexican entrepreneur who attempted to carry out a tax formality in the U.S. His first instinct, as a Mexican, was to seek out some contact who could aid him in expediting his request. First he spoke by phone with an official at the U.S. Embassy in Mexico, who told him that he was unable to help him, but that he should go directly to the relevant office. Irritated, the businessman hung up the phone and began to speak with other persons in the U.S. One of these, a lawyer, told him that it was not necessary to ask for help but, more importantly, that on doing so he could be committing a crime. Incredulous and fearful, he went to the respective office and within fifteen minutes, without anyone’s help, he finished his business. The contrast between the two ways of functioning could not be greater. Here, everything is designed so that someone is benefited –from receiving a “modest” tip to being consigned an entire market-, while there, the system is user- and citizen-friendly.

One of the paradoxes of the system that we inherited is that it has become much more intricate from when the PRI was defeated in 2000. Before that, there were mechanisms, not frequently employed, to limit some of the worst excesses (as occurred with the “quinazo” –read newly inducted President’s Carlos Salinas’s jailing of PRI coreligionist and PEMEX syndicate kingpin Joaquín Hernández-Galicia “La Quina”), but these were never conceived of to construct a more functional and fair nation. With the dispersion of power that we have observed, there does not appear, under the current circumstances, to be a human power that allows for limiting the abuse that citizens suffer at the hand of bureaucrats, politicians, unions, business, and other “de facto” powers. So then, what it to be done? It would be easy to seek out the guilty –who did, or did not do, what- but this would not help us. If one peruses the newspapers or listens to the news, there’s no dearth of guilty parties. The problem is that such an approach does not change the reality.

It would be more useful to look for ways of going about whittling the system down that permits so much abuse and excess. There are two great lines that the citizenry can begin to voice in this direction: action and organization. As to actions, we could begin by saying NO, each of us at their own measure, to that world of privilege and its concomitant abuses. Simple things such as paying a fine instead of a bribe, parking, even if at a distance, so as not to promote ”rent” of the public way, standing in line when necessary, refusing to purchase something without the value added tax. A quixotic attitude may sound artless (and in many senses it is), except if it catches fire. With such an intricate system and an ensnarled structure of beneficiaries, it is difficult to believe that one person or one family can transform a nation.

The only way to effect a change is by creating an organization that little by little adds sufficient numbers of people to create a critical mass and to become a political factor to which the real powers –governmental as well as “de facto”- cannot deny dealing with. A group or family that decides to convene other families who join in with acts of “active resistance” in a situation such as our that of present one, in which we cry ”basta” every time could well spark and precipitate a sea change.

Gandhi instigated the strategy of passive resistance to defeat the colonial enemy. In our case, what is needed is a cogent and vigorous citizenry, willing to comply strictly with the obligations and regulations that life in society exacts. For Mexicans, the alternative is to hope that someone, in the goodness of their heart, will change things from on high, or to begin to do it by ourselves every minute of the day.

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