Opinion Archive

What to Make of Mexico's Economic Self-Sabotage

July 16, 2008

Underdevelopment requires a lot of work. It is hard to consistently make the mistakes and the misguided interventions that stifle growth.  It is a skill that Mexico has mastered. Not so much as to make it a total economic basket-case, but sufficiently to have missed out on one of the greatest growth spurts in the history of man. Mexico has been a victim of poor government communication that has allowed Mexicans to be overcome with a paralizing fear of change.

The left preys on these fears, using class conflict to sell anachronistic platforms that the spectacular rise of capitalist China has proved wrong. But, despite 26 years of center-right presidents (Miguel de la Madrid to Felipe Calderón), Mexican economic liberals have yet to convince society that their welfare-infused free-market model is best. Mexicans don’t trust anyone, but given a choice between socialist-bureaucratic kleptocrats and capitalist kleptocrats, they have been taught to choose the former. It’s a combination of “better the devil you know” and a self-sabotaging tendency to cut off their nose to spite their face. Five successive free-market presidents have been unwilling to face down the ghosts of Mexico’s statist past because they think that ordinary Mexicans are either too dumb, or too contaminated by the left, to understand how wealth is created.

The upshot is that Mexicans feel patronized, so they listen to the siren-song of a left that has no time for intelligent analysis (or reason). Demagogues celebrate a mediocrity that Mexicans feel comfortable with and then revel in their economic suicide pact. It’s all incredibly dysfunctional.

Business is from Mars, the people are from Venus

The average Mexican is enterprising, hard-working and has the same aspirations as the average American. But, unlike Americans, they are fatalistic and, in their fatalism, they prefer the corruption of the left (bloated, opaque unions) to the corruption of the right (politically-connected private-sector monopolies). They need to be convinced that the world doesn’t have to work that way; that proper free-market competition is the solution, not the problem. How?

First, get rid of the “rich is rich and poor is poor and never the twain shall meet” attitude. Second, don’t run from the PRD’s blatant effort at a media coup de grace via the referendum on energy. Embrace it with an intelligent communication strategy. Imagine if the federal government were to win a national referendum that included the more capitalist northern states?

In fact, the energy issue was the perfect platform to present an econonically liberal, socially democratic version of the country under strong leadership. But Mexicans have to visualize the benefit and be overtly shown the loss. In 2006, they visualized their homes being foreclosed if an AMLO presidency brought a financial crisis, which is why he lost. Every time he sticks to defending the status quo, he wins.

This is because Mexicans mistrust change. Most are not ideological, but they believe López Obrador when he tells them that capitalists are trying to pull a fast one on them. So, in the energy debate, it’s about how much each Mexican would benefit from much more investment, not about the “treasures of the deep”. The President could have committed himself to make future investors play by his rules and threatened to re-nationalize those who didn’t. People want to believe that their president works for them. Today, they think he works for Big Business.

In his book, “Words That Work: It’s not what you say, it’s what people hear”, Frank Luntz explains how key words define debates and change minds. As an example, he shows how people were in favor of the “estate”, or “inheritance” tax, but are against the “death” tax. They are all exactly the same thing, but framing the debate in terms of taxing death, not taxing inheritance, changes everything. The Mexican left was successful in killing meaningful energy reform because they stole the debate with one ugly word: “privatization”. The fact that the PAN didn’t even want to have a public debate simply proved their point. Mr. President, you now have nothing to lose. It’s time to take your arguments to the people.

Good capitalism offers a "win-win" proposition, where wealth is created and everyone gets a job. The dark side is oligarchic corruption. Good socialism concentrates on equality of opportunity. The dark side is the closed-minded contrarian sillyness that ends up justifying a statist kleptocracy. Today, despite being better off thanks to free-market reforms, Mexicans see only the dark side of capitalism and are being convinced that messianic socialism is their only defence.

Meanwhile, the president has surrounded himself with an asphixiatingly tight circle of people who don’t believe in changing public opinion. For President Calderón to succeed, this exasperated arrogance has to go.

For the latest thought-provoking article by Agustin Barrios Gomez please go to our Opinion Column page

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