Advertisements

A Brief Review of Mexico’s Neoliberal Era


Photo: mronline.org

By RICARDO CASTILLO     

Now that Mexican President Andrés Manuel López Obrador (AMLO) declared on Sunday, March 17, “the end of the neoliberal era,” a brief review of what it was seems to be in order.

AMLO says that it lasted 36 years through six different presidents; his gauge is correct.

He also said in his calling neoliberalism defunct that his predecessors in the presidency of the nation as of Miguel de la Madrid in 1982 “gave no relevance to planning because they began guiding themselves with prescriptions sent from abroad. From there public policies were defined that were in the end aimed ad guaranteeing the wellbeing of minorities and aimed at the marginalization of the majority of the people.”

A good place to start is with a brief personal memory. Back in January 1983 I worked both as a reporter and translator at Excelsior daily newspaper. At the time President De la Madrid had just made his debut and was to present an outline of his economic policy.

One day I had a late night visit at the old newspaper offices on Reforma Avenue of a dear friend, Arnoldo Saenz, a lawyer who preferred working at press offices of the ruling Institutional Revolutionary Party (PRI) than doing litigation. He told me he had just been transferred from the PRI the Senate and had given his first assignment; translating from English to Spanish an economics document sent from the University of Texas. Could I help him?

My immediate answer was yes. Then he handed me a 130-type written essay by a tax specialty professor named Ralph Landau President De la Madrid had sent to the Senate to turn into legislation. It was a rush job, or a “bomberazo” (a fire fighters’ emergency) as we called rush jobs then, and I had two days to translate it. It was mission impossible for one person but I immediately summoned 12-translators from other newspapers and we got the job done in two-days. Payment came swiftly too.

But back to the foundation of neoliberalism. Among the many indications the document had there was one that grabbed my attention and which is today at the midst of the labor dog fight going on between unions and employers in Mexico.

This clause noted that at the time workers, led by corporate union Mexican Workers Confederation wielded 52 percent of the total manufacturing income while employers had 48 percent. In Landau’s view – which De la Madrid made his – the figures should be turned round to give employers 52 percent and workers 48 percent of total income of a company.

This turnaround in income became the base of neoliberalism. Unfortunately, from the beginning it turned into an economic trend that went from disaster to total nightmare during the De la Madrid administration from 1982 to 1988.

Perhaps the Landau formulae would have worked well under normal conditions. But as soon as De la Madrid arrived in power the world’s oil market came crashing bringing the price down to as little as $6 per barrel.

De la Madrid applied the income trade recipe to the hilt with dire results as by 1984-85 unemployment soared in Mexico as entrepreneurs did not apply the surplus money to enhance their own business giving birth to the phrase “rich businessmen, poor business” with little chance for workers to improve.

To boot De la Madrid resorted to printing money to pay for government expenses leading by 1987-88 to a near galloping inflation.

That, for starters, is what neoliberalism brought about. But that was not the end.

De la Madrid decided that the Mexican economy – till then closed with almost no imports and lots of business monopolies in cornered markets – for the globalization of the Mexican economy by having the country join the General Agreement of Tariffs and  Trades (GATT) in 1986.

This brought some respite to the Mexican economy, particularly to unemployment along the border with the United States, as the maquiladora (in-bond assembly plant) industry blossomed creating low-pay, but much needed jobs. Many of AMLO’s followers were adamantly against maquiladoras, but these industries prevailed as Mexico’s next president, Carlos Salinas de Gortari, came up with the North American Free Trade Agreement (NAFTA), one of the finest things to happen to Mexico during the neoliberalist era.

The Salinas administration (1988-1994), however, turned into a total disaster as Salinas sacked the national finances, leaving behind a huge debt to the following president, Ernesto Zedillo, who two weeks into power, on Dec. 14, 1994, had to administer the nation’s worst financial crisis, still known as “the error of December,” which sent the banking system reeling.

Zedillo managed to pull the nation ut of the hole with the aegis of then-U.S. President Bill Clinton, who for starters lent Zedillo $21 billion to keep the government afloat (with Clinton not withholding his famous phrase, “it’s the economy, stupid”). By the end of his term in 2000, Zedillo managed to balance the budget and gave the central Banco de México (Banxico) autonomy over presidents, creating a much-needed sheltering international reserve fund, which since its creation has kept the nation’s economy buoyant.

That covers the first 18-year period with the final tabulation being that even if unemployment had somewhat abated, the neoliberal formulae of making the rich richer and the poor poorer kept going during the next 18 years, covering the administrations of Vicente Fox, Felipe Calderón and Enrique Peña Nieto.

The final tally of poor people in Mexico, according to the official National Institute for Geography and Statistics (Inegi), is that 56 percent of the population lives below the poverty line, with little hope of improving under the past neoliberal policies.

The problem now is where will AMLO’s policies take Mexico next? Will the idealistic President AMLO – dubbed by his foes as the “Tropical Messiah” – lead the nation into the promised land of economic improvement?

I, for one, would like to live to see that happen!

Advertisements
Categories: Mexico, Opinion, PoliticsTags: , , , , , , , , , , , , , , , , , , , , , , , , ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.