Can AMLO Spread Mexico's Wealth Without Sinking The Economy?
The new president is hoping to strike what has tended to be an elusive balance in Latin America: equitable economic growth.
MEXICO CITY — Judging by its origins and stated goals, the new administration in Mexico appears to be embarking on a long, difficult and yes, democratic path to a more inclusive society that is nevertheless open to globalization.
The cornerstone of its six-year economic program is precisely to minimize social, economic and regional divisions through a more dynamic economy. Simply put, the administration, under President Andrés Manuel López Obrador (AMLO), will seek to reverse — as far as possible and within a reasonable time — the inequalities and poverty that are the undoubted legacies of the governments of the last 35 years.
In Latin America, a continent of stark differences of all types, very few countries have managed to overcome what the Chilean economist Fernando Fajnzylber described years ago as the "empty-box" syndrome. "Empty-box" refers to region's failure, for the most part, to successfully combine economic growth, democracy and social equality. Development, in other words, has too often been non-equitable, and as a result, Latin Americans are now frozen observers in a world of swift, technological and scientific changes that are in turn heralding unprecedented social changes.
There is consensus, therefore, on the need to complement greater economic growth with policies to eradicate poverty. But there is anything but agreement on the means, mechanisms and timeline for doing so. That is especially the case in countries that start out with very high levels of wealth and income concentration. Mexico is a case in point, and it's likely that AMLO will face obstacles and resistance to his redistributive yearnings, though these would not per se invalidate policies meant to change the way the fruits of economic growth are shared.
Old-style economic nationalism will not help the new Latin American left.
The persistence of the "empty box" development pattern has led regional governments of the democratic left to continue to seek regulation and legal mechanisms with egalitarian objectives such as better opportunities and better welfare, jobs and wages.
The López Obrador presidency recognizes the need to insert Mexico into global markets with their unyielding rules of participation. That is an undeniable and crucial factor in managing the country's ability to assimilate new technologies, become more competitive in world markets and attain the quality of mass education markets demand.
Clearly, the old-style economic nationalism that resurfaced in certain countries will not help the new Latin American left. The current conditions of globalization are forcing a general review of political perspectives and diplomatic actions to manage inter-state ties in the region and beyond. These are more complex than 30 years ago when the Berlin Wall came down.
Today, globalized actors interact through new networks of national and regional interests, which have forced the new left to modernize its ideological and political discourse. The constant development of trading blocs, for example, prompts a revision of relations between sovereign states and the demands of international trade or capital flows. These can become sources of financial instability and bitter surprises for particular countries.
AMLO's economic proposals are clearly in that direction: namely to fill the "empty box" through aggregate supply and demand policies that boost the economy, without overlooking the need for some redistributive measures within a new and efficient social policy. His right-wing critics have overlooked the fact that his social proposals have assimilated the capitalist concept of macroeconomic balance: low, stable inflation, and public finances without unsustainable debt levels. It might even be childish to doubt his administration's commitment to an independent central bank, that bulwark of monetary and financial stability.
The internal political conditions allowing this socio-economic utopia must reflect an emerging social pact and institutional arrangements to underpin the collaboration of the organized forces of capital and labor. Their cooperation will also, inevitably require a big dose of mutual trust. Related to that is AMLO's insistence on eliminating corruption, which is now the perverse lubricant of daily, social and economic life. Tackling corruption is fundamental to fomenting trust and collaboration based on the premise that the law is the same for all.
The country will likely see in this presidency a consolidation of some earlier, socio-political achievements, such as clean electoral bodies and better human rights. Indeed, we should not make the mistake of thinking that everything the past has bequeathed to AMLO is bad.