"History is philosophy teaching by example." (Lord Bolingbroke)

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Tuesday, June 13, 2006

"Mexican candidates promise modernization"

Mexican politicians are at it again, promising this and that in a race among three contenders, they've learned from American politics that wooing voters isn't so easy. Perhaps this is why they are following the age-old tradition of "pork", promising to spend big to get the vote. However, Mexico needs big spenders to improve infrastructure and to improve the lives in general of the majority of the population that have been neglected for so long. Here are some proposals:

"A lot of the projects that the candidates are talking about do seem to be white elephants," said Jonathan Heath, chief economist for the Mexico unit of HSBC bank.

Roberto Madrazo, trailing in third place ahead of the July 2 election, sought to revive his campaign this month by announcing plans for an astonishing 1,027 infrastructure and development projects.

Madrazo's Institutional Revolutionary Party ruled Mexico from 1929 to 2000. For most of that era, all-powerful presidents could spend at will, unencumbered by congressional oversight or fiscal discipline.

But leftist Andres Manuel Lopez Obrador has seen those ambitions and raised him a few, including plans for 30 new public universities during his six-year term.

Lopez Obrador wants to build a bullet train from Mexico City to the Texas border. And he plans rail and road links from the Gulf of Mexico to the Pacific to rival the Panama Canal, and highways where there are now only goat paths.
As Mexico City mayor from 2000-2005, Lopez Obrador built miles of double-decker expressways and a free city university.
But the expressways have created their own traffic snarls, and many question the value of the university, which has no entrance exam, gives no grades, and whose 11 degree programs lean heavily toward the social sciences and community activism.

Lopez Obrador's main rival, Felipe Calderon of the ruling National Action Party, isn't sitting this competition out.
He is pledging to crisscross Mexico with new roads and build water treatment and distribution systems — less visible but sorely needed projects.

Calderon and Lopez Obrador are running nearly even, according to most polls.
To some extent, it's traditional politicking.

"Voters do want to see public works," political analyst Federico Estevez said.

The candidates aren't the only ones proposing spending programs. Carlos Slim, "a Mexican telecommunications magnate and the world's third-richest man, has launched a construction and infrastructure company and is pressing the candidates to commit to dozens of new building projects." Worth $30 billion, Slim would profit from the candidates proposals, but at the same time, according to Slim and others, the use of "low interest rates, economic stability and high foreign reserves represent a gold opportunity for Mexico to make a great leap forward."

"What really would be important for Mexico is to break the barrier of underdevelopment, and we are not far from breaking it," Slim said recently.

According to the article, the politicians involved in this year's race are stuck in the 70s, an era in which now abandoned government projects abounded:

In the 1970s, high oil prices produced soaring buildings and mammoth industrialization projects that fueled the development of entire manufacturing towns.

Lopez Obrador and Madrazo seem marked by that era. Both began their political careers in the 1970s, and both are from the oil-producing Gulf coast state of Tabasco, where the landscape is dominated by two things: swamps and big government projects.

In his first big government job, as director of Tabasco's Indian development agency, Lopez Obrador created subsistence farming plots for landless Indians by scooping soil out of lagoons and piling the dirt into narrow, artificial fingers of land.
"It's classic for swampland politicians. You get a lot of mileage by draining the swamps, like Florida politicians 80 years ago," Estevez said.

Many of the artificial plots now stand abandoned, but the government-funded construction boom continues — notably in Tepetitan, Lopez Obrador's hometown. The current local government, headed by his brother, Jose Ramiro, built a large concrete bridge that leads to nearly impassable dirt roads.

History has not been kind to government projects. By the 1980s, Mexico's oil boom had ended, and the country woke up to a hangover of debt and the realization that many projects had been badly planned and poorly executed.
But candidates in the presidential race vow not to repeat that mistake. Lopez Obrador says he will fund his building spree by reducing waste and high salaries in government. Calderon touts private investment.

Mexico needs investment and improvement. So far the only improvement seems to be generated at the grassroots level using the billions of dollars generated annually by remittances. Ordinary Mexicans have organized outside of Mexico by townships, villages, and neighborhoods, creating programs to send home money, expertise, and other amenities that the government either can not or will not provide. Nevertheless, more could be done at the level of government.
First, a taxes could be doubled so that there is sufficient money to pay improvements. Mexicans tax themselves at half the rate of the United States and wealthy Mexicans have learned how to avoid paying taxes at all. (They must have learned that trick from America's or even the wealthy of Europe.)

Next, laws could be changed that would encourage foreign investment and ownership. Why would a foreign investor want to invest in a country that could, at any minute, neutralize investment by nationalizing industries and confiscating infrastructure and property.

Politicians will promise anything to get elected but do they really want to deliver?


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