> > This posting was forwarded to you as a service of the Austin Comite de > Solidaridad con Chiapas y Mexico. > > ====================================== > ---------- Forwarded message ---------- > Date: Mon, 6 Feb 95 21:12:19 CST > From:[EMAIL PROTECTED] > Subject: > > Copyright 1995 International Herald Tribune > International Herald Tribune > > <January> 13, 1995 > > SECTION: OPINION > > LENGTH: 1107 words > > HEADLINE: Mexico's Financial Crisis Is Political, and the Remedy Is Democracy > > BYLINE: <Carlos Fuentes> > > DATELINE: MEXICO CITY > > BODY: > Mexico's financial crisis is really a political crisis. > > The economic reasons for the debacle are clear. In the wake of the North > American Free Trade Agreement, the Salinas administration opened trade > barriers.Imports shot way above exports, until currency reserves dwindled from > a high of $30 billion to a mere $6 billion, and going fast. The economy became > beholden toforeign investment to sustain the peso's value and pay for expanding > imports. > > But foreign investment was mostly in the stock market and speculation. Only > 15percent was destined for the real economy: building plants, higher employment, > higher productivity. As soon as investors realized that the peso's value was > supported by nothing real, a crisis of confidence developed. Capital fled, > Mexico could no longer pay for its imports, and the peso was devalued. > > It is a recurring story. At the end of each of their six-year terms, > PresidentLuis Echeverria Alvarez (1976), Jose Lopez Portillo (1982) and Miguel > de la Madrid (1988) had to devalue, leaving a more impoverished country than > they had found. Each man bit the bullet, took harsh measures and sacrificed his > popularity so that the incoming president could begin with a clean slate and a > measure of hope. President Carlos Salinas broke this golden rule of Mexican > politics. > > First, in an election year, he postponed the bitter decisions until after the > August election. > > Then his own personal agenda interfered. Mr. Salinas wishes to head the World > Trade Organization, successor to GATT, and was worried that an economic crisis > at home would bury his candidacy. Ernesto Zedillo, then president- elect, urged > him to devalue the peso by mid-November. Mr. Salinas was not swayed, and > saddledthe incoming head of state with the burden of devaluation, loss of > authority andlack of popularity. > > Yet, I insist, the problem is political more than economic. None of this > wouldhave happened if two terms that are common in U.S. public law, > "accountability" and "checks and balances," also had currency in Mexico. As a > matter of fact, they are not even translatable into Spanish. > > As Mexico goes from one traumatic succession to another, it is obvious that > thvast powers and the margin of discretion of the executive are the root of the > problem. The president acts outside the provinces of accountability and without > checks and balances. > > Furthermore, he governs with an ever smaller circle of friends and > "technicians," many of them Ivy League graduates for whom the economy happens > ona blackboard, not to real people. These are elite groups more and more > divorced from public opinion, real information and legislative oversight. They > promise the Adam Smith definition of economics, the science of human happiness, > and end up with Carlyle's pessimistic appraisal: the dismal science. > > If we cannot have presidential succession without national trauma in Mexico, > isimply means that the system which more or less functioned between 1934 and > 1968, offering development and social peace without democratic freedoms, is now > over. > > It must be replaced by a modern democratic system in tune with the realities > oa nation with 90 million people, a diversified economy, a vigorous middle > class,an amazing cultural continuity - and 40 million human beings living in > poverty. > > Mr. Salinas played with the Gorbachev Ghost - if you have economic reform > (perestroika) along with political reform (glasnost), you end up like the > formerU.S.S.R., divided, diminished and on your back. > > This bogey should now be dispelled. Mexico must take the decisive step toward > full democracy. Its government and parties should meet very soon and reach a > contract for Mexico along the lines of the agreements made at the Moncloa > Palace, in 1977, which allowed Spain to travel, without shocks, on the road > fromdictatorship to democracy. > > There art 10 commandments for Mexican democracy. > > First is electoral reform. This includes the consecration of alternation in > power, an independent electoral organism and clear rules on party access to > funding and the media. Mexico cannot go on bleeding itself in post-electoral > conflict. > > Four more articles of democracy in Mexico: a working federalism, a true > division of powers, an electoral statute for Mexico City, and the rule of law > through reform of the corrupt judiciary. > > The media are the sixth. The comedy of errors will never end if television - > and Televisa, in particular - neither informs nor criticizes, limiting itself > toparroting the presidential line. > > The next three are human rights, respect for civil society and its > organizations, and reform of security agencies to assure safety at the > individual, public and national levels. > > Finally, a market economy with a social dimension and balance between the > public and private sectors through developing the social sector. > > If political reform is at the start of Mexico's solutions, at the end we are > back in economics. The contract for Mexico must lead to a greater balance > between healthy finances, growing production and higher salaries. We will > achieve none of this if the principles of accountability and checks and > balancesare not forcefully set in place. But we also will not gain anything if > the present climate of vengeance against Mr. Salinas is allowed to get out of > hand. > > Mexico should now devote itself to finding laws, rules of coexistence and > tolerance, freedoms and agreements, so that our present troubles shall never > come back to haunt us. > > Mr. Fuentes, the novelist and poet, contributed this comment to The New York > Times Syndicate. > > > > > Date: Thu, 26 Jan 1995 18:38:58 -0800 > From: David Barkin <[EMAIL PROTECTED]> > Subject: The Mexican Crisis > > Here is an article I wrote to Globe that was not accepted for publication! > > An Alternative Vision of Mexican Development > > David Barkin* > > As a Mexican academic, temporarily in Cambridge, I am gratified by > the excellent coverage that the Boston Globe has been giving to > crisis in Mexico. Your stories offer superb coverage of the tragic > consequences of more than a decade of mistakes in management by a > team of skilled economists. These highly-educated and > highly-placed technocrats, as they are labeled, have fallen into > the trap of transforming dogma into science, an error that others > before them also committed, with similar results: Mexico's peasants > and working classes endure declining real incomes and a > deteriorating quality of life, while the economy is becoming less > capable of supplying the basic needs of our people. Today, the > purchasing power of the average wage is less than one-half what it > was in 1976 and more than two-thirds of the households have incomes > below the nation's poverty level. > > For the last few years, the pundits have been proclaiming Mexico as > the great success story of globalization. Increasing exports and > declining reliance on petroleum were said to be indicators of > progress, while we were assured that exploding imports strengthened > the nation's productive capacity. The virtual flood of foreign > capital offered an opportunity for a small elite to enrich itself > through speculation and manipulation of the stock market, and for > the government to postpone the day of reckoning by offering juicy > returns to well remunerated money managers in the world's financial > centers. The pundits are now pompously asserting the inevitability > of present problems. They are just as audacious in recommending > caution today as they were in urging investors into the heady > waters of international finance in yesterday's markets. > > The huge devaluation of the peso will lead to substantial inflation > in Mexico, as your reporters have noted, and prices of imported > goods will rise quickly and dramatically. Changes of recent years > led to a massive displacement of local production by imported > goods. Years ago, the technocrats decided that Mexico's peasants > and indigenous population were not only too independent but also > very inefficient; they had to be removed from the countryside to > "free" them from their traditional communities, putting their land > at the disposition of more resourceful social groups and making > them available for other tasks. Today, some of the corn for our > tortillas, milk products, and animal feed, to name only a few > essential items, are among the imported goods that were formerly > produced at home. > > Similarly, small and medium sized industries were squeezed and many > forced to close. The widely heralded trade "opening" led to an > avalanche of cheap imports, a costly and unsustainable way to fight > inflation and stimulate competition at the cost of domestic > industries and jobs; aggravating the problem, the banking system > was too busy fueling the speculative binge in the financial markets > to address the complex task of supporting and strengthening the > weakening industrial and agricultural base. > > The bipartisan "rescue" package from the US does not address > Mexico's fundamental problems. By throwing "good money after bad", > the proposed bailout will only further deepen the crisis, by > raising the foreign debt and the cost of debt service. It will > offer a very small group of people in Mexico the opportunity to > continue to engage in financial acrobatics for personal gain. It > will also provide the necessary funds for important financial > groups in the US and elsewhere so that they can avoid the > embarrassment of paying the real cost of their ill-considered > investments: the guarantees will provide funds as a temporary > fillip to financial markets that will facilitate an orderly (and > profitable) redeployment of foreign assets. > > The massive injection of new credits into Mexico will also reduce > pressures to face up to the urgent task of rebuilding capacity to > satisfy our basic needs. To undertake this alternative path, we > must mobilize people to plant crops and raise the animals needed > for work and food, while artisans and small-scale entrepreneurs are > encouraged to rebuild the myriad small industries and workshops to > produce other basic consumer goods. This is the only way that we > can defend our standard of living: by producing products which > create jobs and incomes so that people can buy these products. This > alternative cannot be undertaken without a serious democratization > of the political arena. > > In today's world, a strong domestic economy cannot be shaped in > isolation; but without explicit policies and resources to define > such an approach, international economic integration will surely > continue to exclude people from effective participation in > governance and erode their capacity to supply their own needs, > condemning them to a deteriorating quality of life. This is not an > option which Mexicans can continue to accept: the example of > Chiapas is still an important part of the Mexican scenario, and one > that could be emulated. > > > *David Barkin is Professor of Economics at the Xochimilco Campus of > the Metropolitan University in Mexico City on leave as Senior > Fellow for Latin America at the Lincoln Institute. His latest book > in English is Distorted Development: Mexico in the world economy. > > > > >
