Luis Rubio

“It was the best of times, it was the worst of times… it was the epoch of belief, it was the epoch of incredulity; it was the season of Light and the season of Darkness, the spring of hope and the winter of despair…” Thus begins A Tale of Two Cities by Charles Dickens—a description that could very well apply to our current era, marked by the technological transformation shaking the world and the contrast (and similarities) between Mexican and American societies as a result.

Technological change has been the greatest force of transformation in history, at least since the Industrial Revolution. Millions of people lost their jobs with the advent of the steam engine, and those jobs were not replaced until decades later, causing immense human hardship. Technological change in the digital era is far more complex because, unlike the steam engine, it is extremely difficult for a person with little or useless education (i.e., the overwhelming majority of the Mexican population) to master. Artificial intelligence promises to be infinitely more threatening to existing jobs, and there is currently no provision—anywhere in the world, much less in Mexico—to care for and retrain the vast population that could be displaced.

The point here is that technological change has inevitable political effects, and figures like AMLO and Trump have clearly benefited from these effects, while also exploiting them masterfully—though, of course, without addressing the underlying issue. On the other hand, all nations face the same technological challenge, but how they confront it and their ability to manage it will depend on their history and institutions. In this, truly developed nations have a significant advantage, particularly as Mexico has seen the destruction of the few institutions it had just begun to build.

In the case of the United States, the two key questions are, first of all, whether Trump is a historical exception or the beginning of a new era. The second is whether the institutions so carefully crafted by the Federalists at the end of the 18th century will withstand the assault. The answers time provides to these two questions will be profoundly consequential.

Mexico, for its part, implemented a set of economic reforms starting in the 1980s that laid the groundwork for adapting to the global technological shift. However, these reforms were not broad enough to include the entire population, generating enormous social gaps, increasing regional inequality, and creating a fertile ground for Morena-led governments. More importantly, the economic adjustment strategy was not followed by a set of political and administrative reforms to ensure the country’s ability to govern itself in a new era of competition, negotiation, and constant interaction between federal and local entities, and among the three branches of government: legislative, judicial, and executive. In other words, Mexico entered democracy without institutional anchors capable of providing stability and viability—the two challenges it faces daily to this day. Economic decentralization, inherent to the liberalization strategy, was de facto assumed to be managed by a centralized and ineffective governmental system that ultimately collapsed, as evidenced most extremely by the severe security crisis the country faces. The disconnect between the governmental system and the economy is stark —at the expense of all citizens.

Mexico’s problem today is precisely its institutions —or more accurately, the absence of institutions capable of providing functionality and acting as counterweights— combined with a dysfunctional system of governance. Morena’s attempt to centralize and control more and more areas does not solve the problem; if anything, it exacerbates it. Moreover, Morena’s nature as a structure that is both hegemonic and prone to fragmentation creates gaps, such as the one between the presidency and its party and congressional leadership. More control does not solve institutional weakness, and there is nothing on the horizon to suggest that solutions are coming—starting with the fact that there isn’t even a consensus on the nature (or even the existence) of the problem.

In his essay Mexico: From Democracy to Tyranny, Ernesto Zedillo* convincingly argues that the political deterioration Mexico is experiencing—with the rise of a hegemonic party and the absence of opposition—leads to tyranny. What the former president does not address is the root of the problem: just as he inherited an economy “held together with pins,” he left behind a governmental structure incompatible with the democratic liberalization he himself championed, meaning he left the country’s capacity to govern itself also “held together with pins.” And nothing has been done since then to fix it.

AMLO and Morena, like Trump, are responses to the lack of a solution. But given Morena’s strategy of control, imposition, and impunity —an inevitable dead end, especially for the economy— they will ultimately suffer the same consequences as their predecessors.

*Letras Libres and an interview with similar content in Nexos

www.mexicoevalua.org
@lrubiof

Luis Rubio

A cartoon circulating on social media captures much of the current state of the world: in it, two presidents—Xi Jinping of China and Donald Trump—are reading books. Xi holds The Art of War by Sun Tzu, the classic military strategy book that predates Machiavelli and Clausewitz on such matters, while Trump is reading his own book, The Art of the Deal, the book that explains and defines him, but which certainly has nothing to offer Sun Tzu. Indeed, the world is at war—largely initiated by Trump himself—but his apparent objective seems to be reaching an agreement that entails a redefinition of both international relations and the global economy. If so, he has chosen a rather dangerous path to achieve it.

I believe it’s essential to separate three aspects of what we are currently experiencing: the first, and most difficult to elucidate, is to discern the objectives behind the series of actions Trump has undertaken regarding Russia and China, as well as on tariffs. The second is the strategy he is using —i.e., the method and the back-and-forth steps taken to advance his cause. And finally, the third and most consequential: attempting to determine the limits he faces in achieving his goals. From all of this, we may be able to deduce where Mexico (and the world) will stand at the end of this road.

What we’ve seen is, first, a series of threats to impose tariffs on virtually all countries. This was followed by a formal announcement of those tariffs, demonstrating that he has technicians who can turn his prejudices about supposed barriers to American exports into seemingly sophisticated formulas. The reactions—especially from financial markets—were immediate: global stock markets experienced losses which, by one estimate, exceeded the total cost (adjusted for inflation) of the United States’ military effort during World War II. Simply put, it seems that this market reaction is what, after several days, led Trump to announce that—with the exception of China—all other countries would face “only” a 10% tariff. Financial markets responded positively, failing to notice that the tariffs with the greatest impact on Canada and Mexico, those on automobiles, remained at 25%.

Behind the tariff game, there appear to be three specific objectives: one of a geopolitical nature, involving a redefinition of relations among the three powers Trump sees as key—but especially between Russia and the United States. The deference with which Trump treats Putin suggests he sees him as an equal, regardless of the fact that Russia is, in the derogatory term used by Kissinger some time ago, “a gas station with nuclear weapons.” This perception has led many, since his first term, to speculate that there are other elements in the equation that are not (formally) on the table. From Trump’s perspective, China is not an equivalent superpower, as it is in decline economically and demographically. However, behind the U.S. government’s actions on tariffs, Trump seems to be targeting both China and Germany—two of the largest economies that, in his view, block access to American exports—which explains the visceral manner of his attacks. What is undeniable is both the force he is willing to employ to advance his agenda and the simplistic nature of his goals, which also include weakening the dollar to achieve the same end.

The speed with which Trump has acted—both in cutting government spending and in shaping trade policy toward the rest of the world—suggests he understands there are absolute limits to what he can do. His strategy seems to involve establishing faits accomplis that are impossible to reverse. In this way, as happened with the U.S. Agency for International Development (USAID), he first eliminated the structure and then canceled the program. By the time the judges issued injunctions, the damage was done and practically irreversible. The same pattern applies to tariffs and to Zelensky: first the shock, then he figures out what and how to negotiate.

The ups and downs of recent days suggest that Trump is just getting warmed up. By now, everyone—from financial markets to the Chinese government—knows what aches Trump and how much pressure is needed to get a reaction. Moreover, the destruction of trust capital—America’s so-called “soft power”—that he has inflicted on its closest allies (especially Canada, Europe, Japan, Australia, and Korea) is shocking, and all for no gain. In fact, it’s been pathetic to watch the richest and most prosperous country in the world convince itself that the rest of the world must pay for being subject to its economic interests.

The most obvious lesson seems to be that one must think before acting—and in this regard, the president of Mexico deserves a medal, not because she has achieved anything spectacular, but because by maintaining composure, she has avoided the damage that other nations are experiencing.

www.mexicoevalua.org
@lrubiof

Luis Rubio

In these moments of deep political-economic convulsion, it is impossible to see the world without reference to relevant historical moments, from Edward Gibbon’s “The Decline and Fall of the Roman Empire” to the multiple stories of the beginning and end of the Cold War. Including among these are multiple calls of potential revival of the “Grand Game,” relating to the conflict that the Russian and English empires sustained through the 19^th century. Two modern versions of that era can be found: one, started by Paul Kennedy in 1987, who wrote his famous book “The Rise and Fall of Great Powers,” an invitation to think about the risks that the United States was facing as a superpower, almost literally days before the collapse of the Soviet Union (and. long before anybody saw China as a relevant actor in the world arena). Similar arguments have been made by numerous authors since then, albeit now in the context of the China-US conflict, such as Graham Allison’s “Destined for War,” whose subtitle betrays the core argument: “Can America and China Escape Thucydides’s Trap?”

In these days of rest, but of huge effervescence originating from the American President, here go some of my recent readings on the moment that we are living through.

The propensity to fall into a new cold war seems to be inevitable. Numerous books have been warning of the risk, others seem to be promoting it, but only one of those I read devotes itself to analyzing and studying the factors that could drive in that direction as the author tries to understand the rationality that animates both the Americans and the Chinese. The sound analysis, plus the fact that the author is of Russian origin conveys a unique quality to the book by Dimitry Alperovitch, “World on the Brink.”

In To Run the World, Sergey Radchenko seeks to elucidate the psychology behind the process of decision-making within the Kremlin in the post-war era. How to actually run the world was the objective through the Cold War. The author analyzes the distinct moments of this era within the Soviet government, explaining the logic of military interventions, the evolution of Soviet leadership from Stalin until Gorbachev, and the many attempts (and failures) to defeat the West.

In Rebellion, Robert Kagan analyzes the political-social dynamic, as well as the risks for American society, of the polarization that characterized it. His central argument is that the Americans confront the dilemma of building an integrated and multiracial society. His point of departure is that Trump has been the most recent politician of many in history, who, since the civil war in the middle of the 19^th century, have used racism to advance their cause. It is not the economy that is the issue, says Kagan, but the preservation of a white society, even though that fight has long been lost.

Marc-William Palen puts the world upside down. In his studio of free trade, Pax Economica, he breaks with all dogma and preconceptions. His general argument is very simple and straightforward: trade liberalization was always a revolutionary idea of ​​the Left, starting with Marx himself. It was conceived of as a plan of liberalization against the militarism and imperialism rampant in the 19^th century, bringing together socialists, internationalists, radical liberals, feminists and Christians. Trade without barriers (albeit with some supranational regulations) was conceived as a form of advancing the interests and needs of the poorest and most disadvantaged people. Today, Palen concludes, the de facto alliance between the extreme Right and the extreme Left threatens not only free trade, but above all the possibility of eliminating poverty in the world.

Ruchir Sharma published What Went Wrong With Capitalism, an ambitious book that argues that the world has been distancing from the virtues of capitalism by trying to protect the rich and the poor, the middle class and the workers. Ever-larger budgets are meant to reduce uncertainty, which is a natural component of the economic process. All this translates into ever larger expenditures to pay for the growing propensity to incur unacceptable risk in the financial realm, as well as in real estate and other ambits. Instead of promoting innovation, ever heavier governments threaten future well-being. Essential reading.

Kevin Rudd, Australia’s former Prime Minister, and an expert on China, a country where he lived and studied and whose language he dominates, has written several about that nation. One, which I commented on a year ago, is titled The Avoidable War, referring to the conflict between United States and China, but also taking a stand vis-à-vis Allison’s book, which I mentioned earlier. This year he published a monumental study On Xi Jinping, about the thoughts and policies of the Chinese President. In the era of Trump, this book makes it possible to better understand the political dynamic that characterizes the interaction between the two powers and at least some of the areas of the conflict that transcend the strictly economic.

www.mexicoevalua.org
@lrubiof

Luis Rubio

The French economist Frédéric Bastiat differentiated between what took place in front of everyone, which he denominated “the seen” in contrast with the long-term consequences of these observations, the “unseen.” His point was that it was easy to make ideological decisions or decisions in a conceptual vacuum, but on ignoring the behavioral manner of the members of society these decisions unleash forces and perceptions beyond the capacity of a governor to control. In the Mexico of today the society confronts the consequences of the actions and decisions undertaken by the government as well as those forthcoming from the outside. The mixture provokes enormous uncertainty.

This is not the first time Mexico finds itself before a considerable challenge, although the specific circumstances are very distinct. During the seventies, eighties and nineties, the country endured a succession of economic and financial crises, extraordinary levels of inflation (including the moment in 1984 when it seemed that the country was being plunged into hyperinflation), and interminable incredulousness with respect to the future. Today the population is satisfied, the President is highly popular, and everything would appear to indicate that the current reality does in no way appear to be like that of those ill-fated years. But looks can be deceiving.

Following Bastiat’s logic, what is seen shows two radically opposite circumstances; the unseen obliges us to contemplate the prodigious uphill struggle that the country has before it. The population is content, in that real incomes, thus the consumption capacity, have accrued in noteworthy fashion, an unarguable merit of the Morena governments. On the other hand, the economy is not growing at present, investment -both private and public- is not materializing and the anchor of stability that Mexico trusted in for three decades, the North- American Free Trade Agreement (NAFTA), is in question with the Trump administration.

Everything indicates that we are coming upon the end of an era of the Mexico-U.S. relationship, a period during which the Mexican governments slept on their laurels on taking advantage of circumstances they thought to be permanent and immovable but that now with Trump are coming to naught with no shock absorbers to be seen. NAFTA made possible the growth of a competitive, productive, successful and extraordinarily relevant industrial platform in terms of the generation of jobs, foreign currency and stability for the country in general. Exports became the main engine of growth of the entire economy, despite the colossal obstacles already in existence and those that multiplied along the way, starting with criminality, the dreadful infrastructure and the growing treaty violations, especially by the AMLO government. This was like smiting the feeding trough on purpose.

On the other hand, migration, considered an inalienable right in Mexico, permitted the avoidance of a social crisis, generated an immense flow of foreign remittances and facilitated the neglect of one government after another of the true problems of security, employment, education and health facing the country because migration was serving as an escape valve that seemingly entailed no cost. Similarly to exports, the threat of deportations opens the possibility of an immense social, economic and political crisis.

NAFTA was the way to procure conditions for the sustained growth of the economy. More political than economic in its original conception, the free trade agreement was constituted as a mechanism that, on being able to rely on institutional U.S. support, offered certainty to savers, entrepreneurs and investors. No one can be in doubt concerning the success of the instrument, but Mexico’s most appreciable fault was that of not understanding that it was a temporary mechanism: it was a means by which the U.S. government proffered its endorsement for Mexico to build institutions, the Rule of Law and counterweights for its “take off” in economic as well as social terms.

There is no doubt that there was a more-or-less continual attempt, from the nineties forward, to engender institutions that complied with these objectives, but by now it is obvious that these latter did not accomplish the legitimacy or functionality required for the effective achievement of their purpose. While several of those autonomous organisms accomplished their immediate aims, it is evident at this point that they were remarkably vulnerable. And that vulnerability goes hand in hand with the certainty indispensable for the economy to prosper and for the achievement of the objectives that all these governments said they want.

Independently of what is reached on negotiating with Trump, one would have to be blind not to notice that the future, to be successful, will depend not on the connection with our neighbor to the North, but instead on the institutional strength that Mexico develops for itself. The President’s strength is sustained in anchors that are overly fragile, therefore it would not be excessive to begin thinking about buttresses less susceptible to collapsing the day Trump gets out of bed in a bad mood or the day that the rating agencies say that enough is enough. The future must be built and, now more than ever, this depends on what is accomplished internally, because it’s not going to come from the outside.

www.mexicoevalua.org

@lrubiof

Luis Rubio

The decisive moments of the becoming of a country are those during which effective leadership arises that confronts grave adversity in contusive fashion. Present-day Mexico confronts two adversities: the foreign one and the one that is homemade. Regarding the former, the President is doing the best possible. The latter derives from a long time back, but it has intentionally worsened over the last seven years.  The combination bodes lethal and presses for answers to which as of today there appear to be none. There is no place to turn: The trajectory is not good, producing only one question: Will there be, first, a recognition of the moment in which Mexico finds itself and, second, the capacity, but, above all, will there be the willingness to do something in that respect? 

Trump’s onslaughts and the uncertainty accompanying these no doubt explain part of the moment that the Mexican economy is experiencing but one would have to be blind, or, more exactly, deliberately closing one’s eyes to not see the causes of a premeditated destruction of the few sources of certainty and economic viability, already weak in themselves, that the country counted on. Whatever is to come of the tariffs that Trump proposes, the country’s future will depend on what the Mexican government does, or fails to do, and, however much the Mexican President deserves acknowledgment for her management of the relationship with her U.S. counterpart, the road that the country is taking is not conducive to promising times ahead.

There are two ways that Trump could be blamed for the moment that Mexico is undergoing at present: one would be for evading responsibility for the ills that the country is up against, those of the past seven years and those of long ago. The other, the desirable one, would be to fault him -that is, utilize him consciously and, even, in a negotiated way- to carry out the things that the country urgently requires, independently of what ensues concerning the tariffs.

No one should be surprised that the economy is going downhill. A quick tally of what the country is enduring is more than suggestive of what falls directly into the lap of responsibility of the two  Morena-party governments: an insane expenditure to win the 2024 election; a strategy of social transfers, tenable in terms of justice but with criteria expressly conceived to impede the growth of production and productivity; price controls (gasoline, tortillas, gas) that will inexorably produce scarcity; the declining production of petroleum for lack of payment to suppliers; the absence of investment in  the transmission of electricity; and the cancellation of a modest, but innovative educational reform, a system in itself oriented towards control, not toward the development of the people or to the growth of the economy.

To this I hasten to add the changes in the rules of the game in matters of regulation of the economy (competition, communications, energy, transparency and access to information); the elimination of the sole effective institutional counterweight that the country possessed, The Supreme Court of Justice of the Nation, due to that it acted as corresponded to it; and by consciously ignoring the problems of security and violence that harass the population for six long years.

The country drags in its wake an essential problem of governmental capacity dating from the nineties, when agreement was reached for an equitable and level-playing field competition in electoral matters that resolved the problem of access to power, but that overlooked the necessity of reforming the structure of the government, thus creating the chaos characterizing the relations among the three branches of government; the violence and insecurity that the citizenry suffers through; and the dysfunctionality of the federal system. The result has been a bifurcated country, with both sides coexisting in one and the same geographic place, where a formal and an informal economy exist, a country of rules and another of violence and a modern country (with a formidable and highly productive economic base) hand in hand with a lagging, unproductive and government-dependent economy.

None of this has to do with Trump, but the U.S. President can end up killing the goose that lays the golden eggs: the part of the country that is productive, competitive and successful. This cannot be minimized: the recession that the country is apparently entering into is integrally the product of Morena. It is its actions, during these two administrations, that have caused the current situation. Instead of fostering the growth of productivity and generating wellsprings of certainty, the current President asks us to trust her. Unfortunately, that is insufficient, in that what generates trust are realities, not promises.

But there is indeed one thing that is at hand and that the President could make her own: rather than regretting the havoc emanating from abroad, the alternative would be to negotiate with our neighbors to obtain their support in undertaking the transformation that Mexico has been postponing for four decades thanks to that the free-trade agreement and migration (prior to AMLO)  made it easy to not engage in reforming and whose smattering of advances were purposefully decimated by AMLO.

The choice is clear: blame Trump or get the job done. And that would imply devoting oneself body and soul to two very concrete things: Create conditions that generate certainty and dramatically accelerate the growth of productivity.

www.mexicoevalua.org
@lrubiof

Luis Rubio

The context speaks for itself but is not consistent. The country is experiencing a species of schizophrenia: on the one hand, it would be difficult to conceive of a higher popularity level for the President. On the other hand, the perception of risk reaches a good part of the population. The former may be explained by the continuity that the current government has sustained, in terms of strategy as well as in social programs, while the latter is more difficult to elucidate, but the combination of both creates an environment of uncertainty that threatens the viability of the governmental programs, thus of the President’s popularity.

The perception of risk emanates from two groups of factors: on the external side, the pounding coming down from President Trump entails a complex and aggressive agenda that is perceived by broad sectors of the society as ominous for the country’s stability and the viability of the economy. This perception is accentuated by the uncertainty that this implies as well as due to the lack of obvious alternatives. As always in the history of Mexico, aggressiveness on confronting the colossus of the North helps with respect to popularity, but even those who are blindly loyal to the Morena party perceive the risk, which suggests that there is greater understanding than disposition for resorting to nationalist rhetoric.

Regarding the internal side, the risk perception derives from the fiscal deficit, the potential effects of the judicial reform, the “revision” of the United States-Mexico-Canada Agreement (USMCA) and the concentration of power. Certainly, not all the citizenry thinks the same concerning these elements, but situated within the context of Trump, few feel at peace with respect to the future and there is no way that Mexico will emerge immune from this entire trail of factors. In any case, the gravity or profundity of the impact depends a great deal on the government itself, and it is there that the uncertainty begins.

The government is in control, or has the capacity to be in control, with respect to some of the risk factors, but its ability to influence those not under its control is, naturally, much less. What pertains to the economic and fiscal strategy is obviously its own prerogative, although it is similarly obvious that the way that the public resources are employed can increase or mitigate the perception of risk. The case of the judicial reform is emblematic: the government has not only defended and driven the reform, it has also discredited any criticism or counterproposal, without recognizing that this constitutes an immense source of uncertainty.

With respect to the exterior, the government does indeed entertain the capacity of negotiation in the face of the initiatives posed by President Trump but remains an open and risky process. Perhaps more importantly, the immense vulnerability characterizing Mexico for both the average Mexican as well as for potential businesspeople and investors seems not to be recognized by the government. The insecurity, to which the government has certainly attempted to respond, is a fundamental component, but the end-of-2024 constitutional reforms package is not acknowledged as a factor of lack of confidence.

Additionally, all of this must be viewed within the context of the disappearance or destruction of any vestige of counterweight and regulatory autonomy, which is anathema for whosoever is preoccupied with, or who has the responsibility to be preoccupied about the future. The recreation of the power monopoly in the Presidency may be applauded by the beneficiaries of the governmental programs, but it eliminates all recourse against the authority. If to this are added laws such as that relative to preventive imprisonment without a judicial decision, it is impossible for the government to try to aspire to attract investment to the country. On persevering in those mechanisms, the potential of achieving high growth rates is null. Therefore, more uncertainty.

From long ago, the problem in Mexico has been that of power. For years, after the dissipation of the PRI-government alliance that typified the political system during the past century, the problem was the lack of decision- and action-making capacity, the absence of institutional structure for the relationship among the federal branches of government (Judicial, Legislative and Executive) and among those powers and the state governors. Now, from AMLO on, the reality, and, in consequence, the discussion, must be another. Mexico’s political problem no longer is that of debility among the branches of government, but of submission to the Executive, thus the risk arises from the lack of the institutionalization of power, a circumstance that obviously does not worry those holding it, but it should worry them if they wish to be successful in their economic programs, therefore, in their popularity.

In the old system, a “strong” president constituted a source of certainty, even if they lasted only a single six-year term in power. The institutions that were created, with greater or lesser clairvoyance, during the democratic period had as their objective conferring permanence to certainty. Now, the challenge is to find the way to re-institutionalize the political system, an objective that would not only require enlightened leadership, but also an equivalent capacity of and proclivity for negotiation both with society as well as with the organized political forces. An enormous challenge in this era of monopolies and inward-looking governments.

www.mexicoevalua.org
@lrubiof 

Luis Rubio

The China-United States conflict precedes Trump. After years of economic complementarity, for which someone coined the word “Chimerica” to describe a relationship that ties together the relative strengths of each of those nations -manufacture for the Asian giant, creativity and technological innovation for the superpower- these two began to distance themselves from each other. Many were the causes of the separation, but there is no doubt that the disconnect unleashed enormous forces around the world, at the same time accentuating the characteristics of each of the parties. On the U.S. side, the retraction hardened with respect to the so-called globalization, while China focused on propping up its strengths, starting with that of technological education. Many lessons here for Mexico in both cases.

In a recent article by Sam Dunning entitled China’s Unstoppable Chinese STEM Army: America can’t halt Chinese innovation, the author describes the contrast between U.S. failures in educational matters, above all its distance regarding technical training, in the face of the Chinese emphasis on science (S), technology (T), engineering (E), and mathematics (M). China, just as have many of the most successful Asian nations, dedicated themselves to build a future on a solid platform of physical, health, and educational infrastructure. In what concerns education, as this article suggests, the Chinese favor scientific and technical education to increase the productivity of their economy and to raise the standard of living of their population. From that logic derives an entire ensemble of actions that not only have permitted them to transform their economy and their country in general, but also to establish the bases for their future. As other nations of that region have evidenced, it is yet to be determined whether it is possible to sustain compatibility between their political system and their economic development, but what there is no doubt about is the spectacular transformation that China has undergone over the past four decades. 

In the light of that panorama, one must ask oneself what is it that Mexico has achieved during that same period. Like China, Mexico recognized in the eighties that its economy no longer functioned, and that major surgery would be required to confront the challenges imposed by a growing and demanding population. From that time, a period was embarked upon of economic reforms and, eventually, political reforms, which modified the economic structure from the country’s core, as well as of the structure of power. However, no one is surprised that, despite an infinity of advances, the result has not been wholly satisfactory and much less so when it is compared with what nations in other latitudes have achieved that invested in educational systems and infrastructure in systematic fashion.

The appeal that China has for many members of Mexico’s Morena Party in that context is evident. At least one should be grateful that they see in China an example and not in Cuba or Venezuela. At the end of the day these Morena constituents understand that what is indeed significant here is in effect the economic transformation. Nonetheless, what they yearn for in China is the authoritarian structure of political control that the Chinese government exercises. On the other hand, it does not stop being paradoxical that they are attracted by the results, but they are not willing to do the work to get to a similar place.  Where are the infrastructure projects -based on cost-benefit calculations- that would liken Mexico to the Asian giant? Where is the promotion of private enterprises to carry out that transformation? Where can one find the educational system oriented toward technological development? The model that appears attractive to them involves a great deal of work that no one in Morena seems interested in replicating.

Much more relevant is the example that other Asian nations provide that attained similar transformations without the brutal authoritarian controls that distinguish China. Korea, Taiwan and even Thailand, Vietnam and Maylasia, not to mention India, illustrate reform processes much closer to those of the Mexican one, some having obtained the consolidation of fully democratic political systems on a par with notable economic and social successes. It is obvious that there isn’t only one way to advance, but the Mexican way has been clumsy, to say the least. In very much the Mexican own style, after the initiation of the reforms, an incomplete but articulate and coherent project, what followed was reactive when not the product of mere occurrences.

And there it is where Mexico persists: in occurrences, dreams and disputes. The great lesson that the diverse Asian nations depict is their clarity of course and their concentration on the construction of conditions to make possible the attainment of their objectives. Mexico has gone from failure to failure: some administrations liberalize, others impose controls; some worry about security, others revile it, without doing anything to resolve the underlying problem. All talk, but no one confronts the true obstacles that keep the country prostrated.  

The past cannot be changed, but instead of seeing Trump as a threat, why not see him (or use him) as an opportunity for taking a great leap forward, to provoke the transformation that Mexico obviously requires but that appears to be hindered by all those interests and dogmas.

www.mexicoevalua.org
@lrubiof

Luis Rubio

Two very different moments portray recent times. One is that of AMLO and what he represented. The other is that of Claudia Sheinbaum. Although they have stemmed from the same locus in these last years, from Morena specifically, their histories are clearly distinct. The movement that AMLO headed was, in the words of Fernando Escalante, “a great offensive of the political class against the State.” The second moment is that of the current government, whose origin no longer harkens back to any of the PRI currents of the 20^th century but instead refers to the political Left that emerged with the university student movement in the eighties and that eventually fused with the “historical” Left into what ended up being the United Socialist Party of Mexico (PSUM). Although one government arose from the other and insists on persevering in the project of the ancestor, its essence is different and will undergo distinct consequences. However, rather than leading toward a great future, both have succumbed to what Román Revueltas calls a “strong and non-negotiable Mexicanness.”

As a “son” of PRI, AMLO dedicated himself to concentrating presidential power and to conferring preeminence on the government. AMLO’s project was easily identifiable as derived from revolutionary nationalism, one of the two prominent branches of the PRI in its origins. The PRIsts always entertained the conviction of sticking to the formal rules, at least in appearance, modifying -but not annulling- the status quo and, above all else, preserving political stability. The materialization of that vision lay in economic growth as a factor of both development as well as of stability, values that AMLO opted to subordinate for the building of a clientelist system with obvious political as well as electoral benefits, but at a monumental cost for stability and the future. Where he deviated with respect to the tradition of his party-of-origin was in AMLO’s contempt for formalities and institutions. While his predecessors carefully honed their discourse and outwardly revered the institutions although all the while violating their rules (under cover of darkness), AMLO chose to concentrate the power in his person, not in the presidency. Perhaps more transcendent, his entire government devoted itself to undermining, if not destroying, the legacy that he defined as “neoliberalism,” the economic project that pulled the country out of the ditch from the eighties on and that led, indirectly, to the political liberalization of the nineties.

During her first months as President, Claudia Sheinbaum has clung to the pathway marked by her predecessor, but she has been exhibiting significant differences. Above anything else, by personality, history and training, she is the most distant from the old PRI that Mexicans have known. While her PAN predecessors continued to pay deference to the ways of the old system, she has etched her own style from day one, beginning with the reverence she shows toward her predecessor, something heretofore unknown in previous Mexican political history. Secondly, in contrast with AMLO, she not only understands the importance of economic growth in terms of attacking poverty and inequality, two of her project’s central values, she is also poised to find the way to accelerate it. Her strategy for achieving this (budgetary, rhetorical and institutional) can contradict that purpose, but it does not seem to me that there exists the least doubt regarding her conviction in that respect, further evidenced by her dedication to dealing with Trump. Third, her security strategy recognizes de facto notonly the enormous deficit left to her by her predecessor, but also the brutal cost of those famous bear hugs, as they comprised an incentive for the consolidation of organized crime in diverse regions of the country and sectors of the economy. Finally, she has been explicit in her conviction that the government has the responsibility of not only leading the development of the country, but also of regulating it and being the central factor in that process through public enterprises. That is, her stance remains one of Leftist conviction, not of convenience, such as that of her predecessor. 

Clearly, these are not irreconcilable visions, but they are very distinct. Both favor the government over the market and public enterprises over private investment. Also, both share an anti-American streak, independently of whether, on their rational side, they recognize the need (or inevitability) of preserving the trade agreement with North America as well as a functional relation with the American people. Paradoxically, in many senses, both AMLO and the President represent much of the traditional character of the Mexican.

Román Revueltas argues this from start to finish: “Mexico has ended up not liking the West. It also is not thrilled with modernity. It takes solace in, it is true, the permanent evocation of a mythical past, local of necessity, obligatorily autochthonous.” Revueltas poses the central dilemma that the country faces from an anthropological perspective: “The outdated victimization of our people, inculcated at an early age in the schools and seasoned with the corresponding resentment, has rendered the flowering of a strange repudiation of our Northern neighbors.”

AMLO navigated without committing himself; now in the Trump era, Mexico has no choice but to define itself fully: toward the future or toward the past. The President will have to choose.

www.mexicoevalua.org
@lrubiof

Luis Rubio

Absolute power, insinuated by Lord Acton, is not a guarantee of good government. And even more so when all that power lies in the hands of an ethereal entity called the Morena party that, now without the active leadership in control of all the processes of AMLO, is becoming a complex, increasingly bureaucratic entity with a propensity toward fragmentation. And worse yet when the absence of even the most minimal semblance of counterweight -the result of the popular vote as well as of the illegal overrepresentation in Congress produced by AMLO- does nothing other than embolden the most extreme, radical and disruptive elements of the party.  All of this leaves a president in control of part of the administration and with a demonstrated ability for conducting the complex relationship with Trump, but not with recognition of what makes an economy work.

The contradiction is conspicuous. In fact, read contradictions, in the plural. Morena, everything that that “movement” represents, is allergic to economic growth, but this is required to finance the interminable cash transfers it needs to fuel its client base, without which the supposed hegemony would cease to exist. AMLO understood well the inconsistency between loyalty and economic improvement: when people progress and become middle class, he said, they stop being loyal, thus it’s better to keep them poor and dependent. That worked for a while, but, as illustrated by the excessive and irresponsible fiscal deficit incurred in 2024, its limits are egregious, the reason why President Sheinbaum knows there is no option other than promoting economic growth. Her “Plan México” constitutes a recognition of that political imperative but also evidences the enormous distance between the objective -growth and nearshoring- and her comprehension of what would be required for productive investment to materialize.

Morena has driven a series of laws, constitutional amendments and incoherent regulations, nearly all these incompatible with a growing economy. The upcoming recession is palpable proof of this: however much the functionaries congratulate each other on the investment received from the exterior in recent years, the reality is that there has been practically no investment since the beginning of the past government of AMLO back in 2018. The savers, entrepreneurs and investors, national as well as foreign, have many options at their command and will never opt for those that entail intolerable risks. Risks such as those inherent in a politicized judiciary, a bureaucracy that changes the rules of the game according to the whims of the functionary or president in turn and, above all, a political apparatus that can change the Constitution in the blink of an eye. Only out of ideological zeal and political intransigence can it be expected to attract investment in this way. 

The era in which the markets, mainly the financial ones, could dictate the limits of governmental acting (of all world governments), as took place during the last nearly half century, has passed, giving way to the reappearance of the power of the State. However, investment can equally be directed to distinct places, depending on the objective conditions of each locality. The term nearshoring has been in the vernacular of the world of commerce and the economy for years and the logic would seem to establish it as obvious that Mexico would be the great beneficiary of that geopolitical circumstance due to its geographic location and the existence of the United States—Mexico—Canada Agreement (USMCA). Notwithstanding this, there have been at least three slipshod governments that assumed that the opportunity would materialize on its own with no effort (or that it was not an opportunity at all). The evidence shows that the great beneficiaries have been countries such as Vietnam, Indonesia and the Dominican Republic, nations that seized the opportunity without flinching.

And then came Trump. To date (and this could change in an instant) President Sheinbaum has achieved a functional relationship, skirting the worst outbursts of her U.S. counterpart, but the fragility of the relationship is evident, whenever the gentleman in question wallows in a half-cooked idea or, more important, in the enormous vulnerability of Mexico, which Trump understands full well. Still more importantly, the “arrangements” arrived at do not include objective measures to which the parties can remit in the case of a disagreement, implying that everything is (and I fear will be) in the air for the next four years. And there is no worse dissuasive element to saving and investment than instability and uncertainty.

What is peculiar is President Sheinbaum’s extraordinary (and praiseworthy) willingness to negotiate with Trump and to devise ways and arguments to pacify him in the face of the absolute indisposition to understand and accept the need to review deep-rooted concepts and prejudices that are contrary and counterproductive for appealing to investment and promoting economic growth. It is not sufficient to recognize the need for growth and private investment (a milestone in itself after AMLO), because a decision to save or invest does not hinge on the rhetoric, but instead on the objective conditions and these have come to evolve as running precisely counter to what a potential investor requires and demands. 

As Deirdre McCloskey states, “the evidence is overwhelming: that liberty, not coercion by a private master or a public state, inspires people to continuous betterment. For the poorest.”

www.mexicoevalua.org
@lrubiof

Luis Rubio

Mexico is split into two worlds with perceptions appearing to be irreconcilable. According to recent surveys, President Sheinbaum commands more than 70% approval, while the remainder of society disapproves of her, frequently in resounding fashion. In general terms, these numbers are not radically distinct from those observed in the 2024 presidential election or from the trends of recent years. Perhaps the big question is what this tells us about the present, but, above all, with respect to the future of the country.       

The first thing that should be elucidated is wherefore these numbers derive because on their permanence depends the entire governmental strategy. When the government relies on such high approval numbers it is easy for it to ignore the rest of society, whether because the government loses sight of it or because it has consciously decided to ignore it. That is, this is about a calculation and a wager: the calculation concerning whether that support base can be maintained with the existing strategies and the wager having to do with there not being factors that alter the equation.

According to Alejandro Moreno’s surveys starting in 2023, 60% of the population felt satisfied, it had seen the growth of its real income thus of its consumption capacity, therefore it approved of the then-president’s management. On its part, the remaining 40% disapproved of the president’s management on considering that it was damaging the future well-being and attempting against the prospects of growth and development. The central difference between the two contingents lies in the level of schooling, as well as in the contrast relative to their place in the socioeconomic structure: those who live day-to-day against those able to count on relative certainty in their economic future. The former have benefitted from the direct transfer programs of the Morena governments, while the latter agonize over the country’s long-term stability and viability.   

That is, the crux of the contrast seems to lie in each contingent’s perspective of time. For the cohort that feels satisfied, what is important is the here and now; for the remaining 40% what matters is the perception of the future: Where are we going? This is about perspectives emanating from very distinct visions and economic realities, that expose the circumstance of a divided country: the one that has had the opportunity to advance on the education ladder and the one that remained mired in an educational system that does not prepare one for the job market nor for life. The former enjoy reliable employment while the latter count on governmental “supports.”

Perceptions are crucial for electoral purposes, but they constitute a risk when their support system is tenuous. To the degree that the government can guarantee that its cash transfers will continue to flow and that their real value will not erode through greater inflation, the bet would seem reasonable. Contrariwise, to the extent that the economy was to confront adverse head winds, the strategy would become exceedingly risk ridden.  

To date, the government has preserved a politico-electoral strategy designed by AMLO sustained not only in the transfers, but also in an introspective vision of the economy, geared toward protecting what exists. With some exceptions, the current government has followed the same general trend, but, although with a content that is more ideological and more quarrelsome and defying, as illustrated by the recent exchanges with Trump, it has recognized the importance, and inevitability, of closer economic ties with the U.S.

Were one to observe the panorama without electoral bias, the present government strategy would appear to be quite daring. On the one hand, the economy faces essential problems: inflation continues to be high; the debt, while not at catastrophic levels, has been growing; the fiscal deficit is highly worrisome (in itself as well as the manner in which it affects the creditworthiness determined by the rating agencies); and the potential conflict with Trump threatens the viability of the principal growth engine of the economy, the exports. On the other hand, except for the issue of security, where it is clear that a new strategy is being attempted, the government has not been doing anything to revert the sub-standard trends observed in education, health, infrastructure, justice, and the Rule of Law. In any case, the reforms of the past months in matters of justice, energy and autonomous entities point in the opposite direction. 

In diverse forums, President Sheinbaum has expressed her conviction that nearshoring comprises a great opportunity for building a successful future. This deals with, without doubt, a possibility that could be fruitful. However, the wager would imply returning to square one in terms of what has been done in the past months for the sake of creating an environment of predictability for investment and conditions for Mexicans emerging from the educational system to possess the qualifications that the job market exacts. We certainly are not there as of today.

When one contemplates the government’s approval and disapproval numbers, the relevant question is who will be right at the end of the road: those who are satisfied or those who are worried because they see the risks multiplying and that the opportunities are not such.

www.mexicoevalua.org
@lrubiof