An Eagle Rising?

In 2000, there was much excitement in Mexico over the election of the first non-PRI candidate in nearly a century with the inauguration of Vincente Fox.  Mr. Fox came into office promising sweeping reforms and an attempt to roll back institutional corruption and graft that had held the Mexican economy and people back.  Felipe Caldorón, the former mayor of Mexico City, said many of the same things.  In 2012, PRI candidate Enrique Peña Nieto was swept into office with again, promises of reform.  However, with Mr. Peña, the world press has focused and sees a bright future for Mexico.  The question is whether Mr. Peña can succeed where his well-meaning predecessors failed. 

Several fronts need to be tackled, simultaneously, if Mexico hopes to realize its potential as a society and as an economy.  Mr. Peña has help that can prove instrumental.  One, he is the head of the leading party in the country but also enjoys support for his reforms from the party of his two predecessors, the Reform Party or PAN.  However, not all of his fellow PRI compadres will go along because some of Mr. Peña’s efforts and plans include checking the influence of the powerful unions.  Some PRI politicians are not going to take on that battle.  Still, Mr. Peña has the chance to make some changes by addressing three key areas – the economy, corruption and migration.   

Economically, while there are some parts of Mexico that are doing well, others are lagging dramatically behind.  No one party can lay claim to an economic plan that will save Mexico therefore, a new approach will need to be developed nationally, if not locally.  Nationally, the north is developing at a nice pace with GDP per person at some of the highest levels in the country (Nuevo León, $16,000; Coahuila, $11,100).  Outliers to this statistic include Quintana Roo on the Yucatán at $10,600 and the hub of money in the Federal District ($19,200).  Most of the country, including the bone-crushing poverty in the south in states like Chiapas ($3,600) and Oaxaca ($4,100) and those hovering around mediocrity such as Tabasco ($5,900) and Michoacán ($5,500), are in desperate need of increase investment and more business-friendly measures.  The only way this can happen is to loosen the power of the unions. 

The unions, along with politicians and the police, is a source of corruption and graft.  There can be no “business-friendly” atmosphere unless the level of crookedness and red tape can somehow be reduced.  It is not just the big corruption but the everyday, almost mundane levels of graft that is crippling Mexico.  In a study reported by Economist, Mexican households spend approximately $2.5b (32b pesos) annually on bribes for things ranging from “public” services to primary school.  For many international businesses, to go into Mexico is to accept a level of corruption that is seldom seen.  Of course, the same Mexicans who are paying these bribes cannot or will not express their outrage – many feeling that the problem is too big.   

Only by increasing the economy throughout the country, only by reducing corruption from the highest levels to that directly impacting each Mexican family, can there be any hope of curbing or regulating more effectively the migration issue.  It is true that recent emigration levels have dropped significantly but only because the economy of the U.S. is so uncertain.  The most recent Pew Research study show there are roughly 12m people in the U.S. who were born in Mexico.  Consider the talent and the intellect that is leaving the country - and in many cases, not returning.  Additionally, the cavalcade of children making their way into the U.S. highlights Mexico’s issue with immigration across its southern border.  Included in this tale are those who are entering the U.S. under the orders and threats of drug cartels.  The Mexican government, in recent years, has made progress against such forces but to suggest that the threat has reduced would be a fallacy. 

Several years ago, I visited Mexico City.  What I saw is a hard working population that is fighting uphill to make it to the end of the day.  Regularly, they see a government that does not seem to work while they pay their Danegeld each day with little to no long-term benefit.  Mr. Peña has a tough road to travel but he has the resources, both in the land and the people, to make Mexico the envy of the developing world.  A great many things need to fall in place but if political courage can rise with public outrage and indignation, the major problems of Mexico today could well be studied in the history books tomorrow.