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Is Mexico an emerging economic superpower?


In an exclusive blog for LAB, Mexican sociologist Luis Vasquez expresses scepticism about his country’s recent promotion to the ‘super-league’ of economic powers.

Mexico: Brave Old World Is Coming

For those who defend the process of economic modernity, the problems of poverty, informality and criminality (which in Mexico include its dirty war) are challenges that can be confronted within a process of modernisation. Brazil grows despite poverty and violence in its favelas. Russia does as well despite Islamic terrorism and separatism, Turkey despite Kurd separatism, not to mention China with its extensive problem of poverty and its huge population. Indeed, in comparison, Mexico is a good candidate to be a “MINT country”, as the latest group of countries experiencing global modernisation has been dubbed. As the banker and economist Jim O’Neill shows in his recent programme on Mexico for BBC’s Radio Four, many Mexicans believe that the “Mexican moment” has arrived.  The only problem is that Mexicans have been told this since 1910. And, for some reason or other, the benefits have not yet reached them. Slum in Mexico CityIn fact, I should qualify this claim and weaken it. Modernity has been arriving in cyclical movements to some enclaves, regions and cities. Which implies that there are enclaves, regions and cities that are not involved in the same economic dynamic and have different cycles. In reductionist fashion one analyst back in 1920 observed that the country was divided into two cultures. With later economic development, this typology was almost forgotten until it re-emerged strongly in 1987, at a time of economic crisis. It was said at the time that there was a “México profundo”, which was traditional and rooted in the past, and a “México imaginario”, committed to modernity that was breaking with its roots. A little earlier a US historian had gone further and had discovered, not two, but many Mexicos. Whether or not one accepts these typologies, they can be useful as a point of departure for analysis. However, they became an obstacle when they introduce too many independent variables that are analysed separately. For instance, it is strange that the protests, the guerrillas and the paramilitary self-defence groups, along with the most aggressive sectors of the teachers’ trade unions, are found in states (Mexico, like the USA, is divided into states) where high levels of poverty, criminality and informality are found. And all this takes place in what we used to call “México profundo”. Here modernity arrives drop by drop. However, as O’Neill wrote in an article to accompany the Radio 4 series, Mexico, Indonesia, Nigeria and Turkey will only be capable of imitating Chinese growth if they are able to put their house in order. O’Neill himself mentions violence and drug-trafficking but there are other deeply embedded factors that weigh Mexico down and keep it captive. Let me give a straight-forward example: the demographic bonus. In China and India the pool of young people has been used to promote modernity. But in Mexico that only hope of employment for many young people is in the informal economy. In some regions young people are joining agro-business driven by drug-trafficking. Today, as I write this blog, I saw a photo in a regional paper of young people in a rural village in Apatzingán in the state of Michoacán of civilians confronting paramilitary forces under the command of the army.  It looked to me like a photo from the Vietnam War because behind the back of the young people, who were walking towards the photographer, you could see a lorry in flames. These young people were clearly part of a “narco-insurgency”. The accusation they face is one of “complicity” when a more appropriate description would be “unemployed youth”. They refused to speak to a team of Japanese reporters, shouting: “The revolution begins today”. The way these rural youngsters were being treated reminded me indirectly of the way urban youngsters, working in the informal market economy, will do anything, legal or illegal, to survive on the outskirts of society. Except that there are millions of these marginalised people, who are not just found in the poor town of Tepito that O’Neill visited for the programme. In Guadalajara I could see the result of this massive influx into the informal economy. Weekends are a particularly good example of the state’s iron fist as the youngsters are rounded up and lorry after lorry takes them away.  Clearly many of them are drug addicts, transvestites, thieves and so on but, speaking from an economic standpoint, what is important is that they work in the informal economy. On Saturdays and Sundays they gather behind the building of the Public Federal Ministry (the Ministry of Fear, if I can make an Orwellian allusion) and they are controlled by water sprayed at them under pressure from the anti-riot lorries. For the police it’s a perfect set-up: the more arrests they make, the greater their income from fines. All the machinery works perfectly to persecute and punish the young people. What they do with their lives once they’re released is their problem. They have no option but return to the despair of their life in the informal economy. There is not another Mexico pulling them in the opposite direction towards the “Mexican moment” of take-off as a world economic power. Drug-war victims by the roadsideSo am I saying that there is a Mexico that is opposed to modernity? No, that’s not what I’m claiming. Just like O’Neill, I believe that we have to put our house in order as soon as possible to stop us sinking into total violence. Apatzingán is a good enough example: in another epoch it was an example of the modernity brought by cotton agro-business. But world demand fell and agri-business adapted to other crops, including poppies and marihuana. The region grew in response to the globality of illegal agribusiness. And illegal crops were more profitable than legal ones. And in this way nacro-insurgency won supporters. But it is strange that military operations in Apatzingán are centred around the port of Lázaro Cárdenas. This region is riddled with a counter-insurgency that pits civilians against civilians, but the state is arming arming just one of the factions. This is what the photo I referred to above is about. Why is this? O’Neill speaks of oil and energy reforms. As a good colonial country, we continue to entice investment with our cheap labour and raw materials. Nothing new about that. But from the informal economy arose a response as twisted as the tree from which it grew. A narcoinsurgency group known as Caballeros Templarios has made a deal with the Chinese mafia and they are working together to control the export of iron, competing with the multinational ArcelorMittal. It is is to put an end to this alliance that the army and the marines have occupied the port of Lázaro Cárdenas. Is this global modernity or a return to the colonial world of the past? I end my commentary saying that the well-intentioned prognosis made by O’Neill reveals his inexperience of this side of Mexico. He got to know the Mexico that dreams of becoming another China … “even if it takes 30 years”. In these 30 years the demographic bonus will have disappeared and we will all be dead. What seems clear to me is that his forecast hasn’t taken into consideration one important factor, which one economist called “the price of inequality”. And this is the issue that I have been raising: modernity is for an elite while the masses pay the social cost. Perhaps for this reason, the Economist Intelligence Unit prefers to ask whether Mexico is not ripe (“high risk”) for rebellion.  

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