“Friedman Gets Lost South of the Border” announced a headline from Center for Economic and Policy Research think tank February 23. In recent days, someone has been well-meaningly scattering around the internet a boosterish piece by New York Times columnist Thomas L. Friedman concerning Monterrey, Mexico, which contains enough spillover to, by implication, paint a picture of Mexico in general. Among others, I was surprised to receive it in July since it had appeared in the Times in February. In quick-time it was pretty well eviscerated, its innards exposed to the light of wider points of view, its bones well picked and scattered. This was accomplished in good part by Mexican analysts, academics and journalists. plus the foreign media and other experienced long-time observers of Mexico. That experience has given such folks practiced savvy in recognizing mascaraed-and-rouged public relations puffery — the flatulence of political, and board-room chest thumping and wool-gathering. (The NYT maintains a Mexico City bureau whose reporters quite consistently display quick-take skills regarding pertinent history and whose excavation of present leads is profitable. It appears the Friedman Monterrey encounter might have benefited from their input.)
Yet Friedman can be very good when he puts on his deer-hunter cap and goes into his thorough shoe-leather mode. But every once in a while, he gets a clever idea and seems to confuse it for a useful and dextrous tool for understanding what’s going on in some foreign cultural/political clime. Example: His book “The Lexus and the Olive Tree.” Were it not by Thomas L. Friedman, someone wrote, “the book could be dismissed as...another elitist corporate puff piece extolling the virtues of deregulation and the elimination of economic borders in the idolatrous pursuit of money. ....(his) current book has its use, not because it offers...new insights into globalization — it does not — but rather because it reveals so much of the mindset of those ‘liberals’ and ‘new’ Democrats who, like Friedman, have uncritically embraced economic rule by currency speculators and mega-corporations as the inevitable and beneficial future of humankind.”
His Monterrey foray seemed to lack journalistic shoe-leather, and seemed sourced exclusively and precisely from the wrong political/social sector.... if he wanted to know what was really taking place in the city and its environs. This seeming laziness is surprising. Friedman has in the past won Pulitzers and a clutch of other awards for shoe-leather sleuthing, and some hard on-site thinking. But many of those who have found much of his analysis both enlightening and wise (with clumsy exception of “Lexus”) were baffled by the Monterrey wanderings.Friedman’s optimism hinges on the economic revolution Mexico’s new president, Enrique Peña Nieto, promised foreign investors when he was campaigning — nothing less than his pursuit of structural reforms in the fiscal and energy sectors. Tall order. And with this week’s postponement of his suspect “Pact for Mexico,” along with his once much-hailed announcement of the creation of a new crime-fighting “gendarmarie,” the president’s habit of confusing his words for reality and keen thought, seems to have caught up with him. These troubled reforms quickly have seemed to have been hastily, poorly conceived.
Wednesday, the nation’s central bank chopped one percentage point off its economic growth prediction for the year. Economic activity slowed even further in the second quarter; the bank is now predicting Mexico’s gross domestic product will expand between two and three percent this year. And the gendarmarie has disappeared from media mention.
The Pact for Mexico is stalled because its passage into law demands for its structure and backing on all of Mexico’s three primary political parties: Peña Nieto’s Institutional Revolutionary Party (PRI), the just ousted conservative National Action Party (PAN), and the leftist Party of the Democratic Revolution (PRD). The Pact is seen by Friedman as the lever that will break Mexico’s economic “paralysis.” The three parties signed the key reform “Pact for Mexico,” immediately after the president was sworn in. But it, too, has been eviscerated by a number of economic experts. One of these, Gerardo Esquivel, a Harvard PhD, former researcher at the Harvard Institute for International Development, at the World Bank and the Development program of the United Nations. He is now an economics professor at the well-regarded Colegio de Mexico, and the Faculty of Economics at the National Autonomous University of Mexico. He has told reporters that the Pact, besides implying (a very shaky) political consensus, needs to shape the many reforms promised into a very large — and touchy — bundle of realities that have long evaded Mexican politicians.
Unfortunately, Esquivel, along with a corps of other experts, points to the fact that out of the 95 points constituting the pact, the majority are contingent on the unanimous passage (an item-by-item agreement) of the three parties. The two opposition parties, PAN and the PRD — both have accused the PRI of employing corrupt campaign tactics to get Peña Nieto elected president. However that may be, the critical point is that as long as the fiscal reform isn’t passed the rest of the attendant reforms have no chance of success. And Peña Nieto’s postponement Wednesday of the presentation of the much-hyped and long-awaited energy overhaul that would open Mexico national oil company to foreign input surprised many Mexicans. As one observer put it: Peña Nieto’s (brief, but much ballyhooed) reputation as modernizing statesman would suffer severely if he cannot put together an agreement with the PAN and the PRD.
Esquivel notes “there are notorious disagreements among the political parties in terms of how far the fiscal reform can go.” That’s because besides the “assumed” agreement of political consensus, nothing else has really changed to ensure that today’s economy has the conditions to become the global power that Peña Nieto foresees and has promised both Mexican citizens and foreign investors. Like many others, both in Mexico and abroad, Esquivel examines the series of elements that the Pact — and Peña Nieto — depend on. Though they are not being mentioned much, they “only lead one to believe” that the Mexican economy is no different than it was years ago. Especially daunting is the fact, Esquivel sternly notes, the Mexican worker makes less today per hour than he did 30 years ago. (And Peña Nieto now wants to add taxes to the purchase of food and medicine, which will chew up more of that slim income.) In a 12-year comparison with similar income countries, Esquivel unkindly demonstrates that Mexico’s gross domestic product has stubbornly remained the second lowest in Latin America for the last five years, acing out only Haiti. He demonstrates that the GDP per “equivalent adult” in 2012 was precisely at the same point it was in 1978 ($14,000). And poverty levels have not changed “significantly” in the past decade, despite what government spokespeople have claimed. The poverty level ranges from 53.1 percent (of the total population) in 1992, to 51.3 in 2010.
Esquivel cooly points out that a hyped “change in perception” (meaning rhetoric) may be created through sleek PR which could help attract investors. But “the reality is that Mexico faces a deep structural problem that is stubbornly not being addressed by current agreements.” Thus, he coldly observes that, “excessive optimism on the future evolution of the Mexican economy is clearly unjustified. Most likely, we can expect to continue on a mediocre path in both the short and medium terms.” This not the kind of reality what Peña Nieto & Co — nor Tom Friedman — want hear about. It will be interesting to see what rabbits they can try to pull out of ruling party’s presently threadbare metaphorical hat.