and Mexican Prospects
victory this week in the southern Mexican state of Chiapas by Pablo
Salazar, head of a coalition opposed to the long-ruling Institutional
Revolutionary Party (PRI), is an important step in what appears
to be the ongoing meltdown of PRI power in Mexico. It will certainly
strengthen the hand of Mexican president-elect Vicente Fox, who
is on a trip this week to Washington, Canada and Dallas (to talk
with GOP presidential candidate George W. Bush).
the Salazar victory will mean big changes in economic policy or
significant progress toward ending the long-standing guerrilla conflict
in Chiapas may be another question. As Ian Vasquez, director of
the Cato Institute's Project on Global Economic Liberty, told me,
ending PRI dominance in Chiapas "may be a necessary but is
certainly not a sufficient condition for peace in Chiapas."
bigger question is whether the anti-PRI coalition will be able (or
perhaps inclined) to end the endemic corruption in Mexico that has
retarded the country's economic and political progress. An even
bigger question is whether Vicente Fox has an appropriate vision
for Mexican and international development.
would be a mistake, even as one is entertaining second thoughts,
to downplay the significance of Mr. Fox's victory over the PRI on
July 2. The PRI had ruled Mexico as virtually a one-party dictatorship
for 71 years. When Mr. Fox, a former Coca Cola executive and member
of the National Action Party (PAN), generally viewed as a more pro-business
and even modestly pro-free-market party, won, it ended the longest-running
one-party dominance of any country in the world.
Mr. Fox didn't run as strictly a PAN candidate. He headed a coalition
that included the generally business-wary Ecological Green Party
(PVEM), and while he won a comfortable plurality of presidential
coalition failed to win a working majority in the Chamber of Deputies.
That means he will have to spend a considerable amount of time building
on his coalition, and probably making compromises in his program
in the process,
both before and after he actually assumes office on December 1.
election in Chiapas was widely viewed as a test of whether, in the
wake of Mr. Fox's victory in the presidential election; the PRI
would be able to mount a comeback. Although the PAN had elected
governors in some of Mexico's northern states in recent years, setting
the stage for the emergence of something resembling a bona fide
multiparty political system, the PRI had held the governorships
of all the southern states, including Chiapas, pretty much forever.
defeat of the PRI candidate for governor of the impoverished and
sometimes chaotic state of Chiapas, Sami David, suggests that PRI
power continues to crumble. But PRI bureaucrats are still lodged
deeply at all levels of Mexico's overgrown government and will be
loath to give up power easily.
Salazar headed a coalition of eight parties that seemed united mainly
on the desire to oust the PRI. Whether it has a cohesive economic
plan or even a cohesive plan to negotiate with the Zapatista Liberation
Front Guerillas who have waged mostly low-key but sometimes intense
war against the PRI government is doubtful.
MARKET POLICIES UNLIKELY
best approach for a poor state like Chiapas would be a clear turn
to a reasonably free market. Establish secure property rights as
a basis for economic freedom, establish an independent judiciary
system untainted (all right, minimally tainted) by corruption and
favoritism. Then let the people, perhaps with a jump-start from
foreign investment, produce wealth, freedom and development. It
wouldn't happen overnight and it wouldn't come with an ironclad
guarantee. But it would happen eventually.
Ian Vasquez told me that he has not heard of a single influential
figure or party in Chiapas suggesting the single most constructive
step Chiapas could take: giving Chiapas peasants clear and secure
property rights in land they have farmed for decades or even for
is even possible the Salazar coalition could go for a version of
"land reform" involving seizing land from some people,
putting ownership into the hands of the government (temporarily,
of course) and then working out some arrangement whereby peasants
could gain title. That has been the usual pattern in underdeveloped
countries, and it has mostly been a horror.
government control over property could easily set up a situation
where political power and influence are more important in determining
economic outcomes than economic performance producing products and
services consumers want to buy. The result in a state like Chiapas
could be a new form of burgeoning corruption. The state might be
administered by officials and bureaucrats who are not controlled
by the PRI anymore, but are otherwise indistinguishable from the
bad old PRI bosses.
about the future of Mexico in the wake of the end of PRI dominance,
a similar process could face Vicente Fox's national government.
Not only will it be difficult for him to assemble an effective ruling
coalition, but some members of the coalition will be motivated not
so much by a desire to eliminate the corrupt and powerful institutions
the PRI dominated for so long, but to take control of the institutions
and get some of the gravy for their guys.
Vicente Fox is aware of the problems he will face in building a
coalition and putting new policies into place, so as to redeem the
sometimes contradictory (and sometimes virtually messianic) promises
he made to get himself elected. That hasn't stopped him from articulating
an ambitious international agenda that could involve virtually overturning
the "normal" relationship with the powerful Yanqui neighbor
to the north.
early August Fox toured Latin America, with stops in Chile, Argentina,
Brazil and Uruguay, which together with Paraguay make up the Mercosur
"free-trade" bloc. During his trip he argued that while
Mexico is and will remain close to the United States, "our
closeness to the world's biggest market should be useful to every
nation in Latin America." Indeed, since the 1994 passage of
the dubiously dubbed North American Free Trade Agreement (NAFTA),
Mexico has served as a platform for trade by other Latin American
countries with the United States, very much to Mexico's benefit.
also pleaded for an end to the annual charade whereby the United
States unilaterally certifies whether Mexico and other countries
are really cooperating in the misbegotten War on Drugs. Anti-drug
efforts instead "should be a multilateral mechanism where we
all participate with clearly established obligations and goals."
and goals determined by whom and on whose behalf? Well, those are
details to be worked out later. And would a "multilateral"
goal-setting and target-determining effort end up diffusing responsibility
so that nobody could determine who had done what or failed to accomplish
goals? Don't ask. Don't tell.
Mr. Fox didn't suggest the one action that would be most likely
to undermine the power of the drug cartels ending the drug
war. Instead, he trotted out the weary and essentially meaningless
rhetoric of which drug warriors are so fond.
multilateral approach "would allow us to face in an internationally
coordinated manner a crime that is internationally organized,"
said Fox. "It is not possible for individual countries to fight
this scum, this cancer."
NEW NORTE AMERICANO ORDER
for refreshing relations with the United States and Canada
a topic Fox is expected to broach on his get-acquainted trip without
going into details until the U.S. election is over and he himself
actually assumes power Fox has big ideas as well. He thinks
the economic policies and the economies of the three NAFTA countries
should be more closely coordinated, eventually converging, much
like those of the nations of the European Union.
is unclear whether that would mean the kind of bureaucratic micro-management
imposed by bureaucrats in Brussels that is the downside of the European
experiment. Few modern politicians (in any country) have anything
like an appreciation of the differences between free trade and managed
trade permits and encourages all to benefit from the differences
between countries, perhaps even encouraging localities to remain
unique, through voluntary interactions. The European model eliminates
or reduces tariffs, but also seeks to establish central control
and uniformity imposed by bureaucrats (most of whom know little
about trade and essentially hold commerce in contempt) in a central
has reduced tariffs and increased overall trade to the benefit of
the three countries involved. But it is more like managed trade
than free trade, involving all kinds of uniform standards and bureaucracies
to adjudicate whether countries are upholding those often arbitrary
standards. This attempt to manage trade is more likely to engender
disputes with heavy political overtones see the current dispute
over whether the US has violated NAFTA by not allowing (at the behest
of Teamsters and truckers) as many Mexican trucks to operate in
the United States as would like to do so than simply eliminating
tariffs and ceasing to interfere with capitalist acts between consenting
anything, North America would be better off moving toward genuine
free trade than using the European mess as a model and soon, before
the NAFTA bureaucracies become irrevocably entrenched. Mr. Fox is
really off base here though he is hardly alone.
is also more than possible that Mr. Fox will be seeking government
foreign aid from the United States and Canada. He has already pointed
to subsidies given by European Union bureaucrats to less-developed
countries like Spain and Portugal as those countries came into the
NAFTA an institution already exists, the North American Development
Bank, which was supposed to improve infrastructure waste
treatment plants and the like in border areas. But Mr. Fox
has hinted strongly that the bank, which now has "only"
$305 million in capital (provided in equal shares by the US and
Mexico) might be expanded and used as a mechanism to provide massive
aid from the United States Mexico.
betrays a fundamental misunderstanding (though one that is widely
shared) of the ineffectiveness and inefficiency of foreign aid as
a tool for economic development. Foreign aid has, however, been
a lovely tool for enriching rulers and their cronies in recipient
countries and bolstering their political power.
ouster of the PRI as a monopoly party in Mexico has been an exciting
and potentially beneficial development. Before we celebrate Vicente
Fox as a savior, however, we should see if he can evolve from being
pro-business to being genuinely pro-market. The evidence
he has already stated that he plans to keep petroleum and electricity
in the hands of the state is that he is a long way from being
contribution of $50 or more will get you a copy of Ronald Radosh's
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